As much as I despise CBV, I don't think it's fair to call then thieves -in this case, at least.

I can well understand why you've left it go this long, since you mentioned chronic financial trouble, up until recently.

Nonetheless, there have been umpteen articles on this site, and many student loan forums, warning that loans going into default after Jan. 1, 1999, would have no limitation period under the new Ontario 2002 Limitation Act's transition rules. See Sections 16(1)k & 24(4).

http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_02l24_e.htm#BK19

As well, there's been a whole slew of posts discussing the "right of offset," which continues indefinitely, regardless of any limitation period.

Therefore what I can't fathom is why you would continue to leave your money in ScotiaBank accounts after the first hit. They could have wiped the account clean, had they wanted to - and may still do so, if they find enough in it to make it worthwhile.

As Footloose warned, they might be waiting for the debt to balloon, or for you to get on your feet before deeming it productive to start legal action. If they decide to pursue it far enough, it could be difficult for you to buy or keep a home - or worse, you could eventually be forced into bankruptcy. I'm not saying that will happen, but you don't want that sword hanging over your head.

Thank you "pablottawa" for your timely and quick response to my questions. I now have the complete picture of your situation and will provide you with a detailed reply.

Back in 1997 or 1998 when you first made an application to Algonquin College for both a Federal and Provincial student loan, the funds for these loans was provided by ScotiaBank and deposited directly into your bank account.

The Canada Student Financial Assistance Act, under which you obtained these loans, was passed in 1994 and proclaimed in force effective August 1, 1995 and lasted for 5 years until it ended on July 31, 2000 whereby all Federal student loans issued after that date were issued directly by the Federal government through the National Student Loan Service Centre. After July 31, 2000, no student loans were issued by any banks or financial institutions in Canada. These student loans became known as "Direct" student loans.

Student loans issued under the Canada Student Financial Assistance Act during the period from August 1, 1995 to July 31, 2000 were known as "Risk-Shared" student loans because the banks or financial institutions issued these loans and they were also responsible for collecting on any student loan that went into default. With one exception, the Federal government did not guarantee the repayment of a defaulted student loan to a bank or a financial institution. To help cover a bank's losses from defaulted student loans, the Federal government paid a "Risk Premium" to a bank to help cover any costs or expenses that a bank may incur. However, the bank or financial institution was entirely responsible for recovering any defaulted student loans.

Under the Ontario Limitations Act, R.S.O. 1990, Chapter L.15, there was a general limitation period of 6 years for the commencement of a legal action to collect on an unpaid debt. Under the current Limitations Act, 2002 which became effective January 1, 2004, there is no limitation period to commence a legal action for the collection of a student debt that was issued under the Canada Student Loans Act, the Canada Student Financial Assistance Act or the Ministry of Training, Colleges and Universities Act. Under Section 24 of the current Limitations Act, 2002, there is a "Transition" provision for those debts that fall under both Limitations Acts.

In essence, here it what it says in layman's language. If a debt was incurred and went into default under the previous Limitations Act, which in your case it did, determine the date of default and count forward 6 years. If the date ends before January 1, 2004, then the provisions of the former Limitation Act apply. However, if the date ends after January 1, 2004, then the provisions of the current Limitations Act, 2002 apply.

You stated that you defaulted on your student debt in 1999. Therefore, counting forward 6 years brings it past January 1, 2004 and thereby, you fall under the provisions of the current Limitations Act, 2002 which means there is no limitation period for commencing a legal action to obtain a judgment from which ScotiaBank can then apply for a Writ of Garnishment of bank accounts and wages or a Writ of Seizure and Sale of either Personal or Real Property.

Up until now, it would appear that ScotiaBank has not sought to sue you, but they could at any time. In the meantime, they have assigned this debt to one or more collection agencies to collect. Currently, it is CBV. The banks would prefer not to commence a legal action to collect on a student debt but if the debtor is refusing to repay their student loan, they will commence a legal proceeding.

You currently have a bank account with ScotiaBank and they are now using their "right of set-off" to withdraw funds from your bank account and apply those funds to your student loan. You said that you checked with your local bank branch and they had no answer to your question as to why these funds were withdrawn. That is because your local bank branch does not withdraw these funds but it is done by the Scotiabank Student Loan Centre.

It is absolutely imperative that you do not ignore this outstanding and unpaid Federal student loan any longer. Interest charges are being added each day and this loan will "balloon" to a huge amount, so much so that ScotiaBank will eventually sue you and obtain a judgment. If that happens, you can be sure that your wages will be garnished and your ability to obtain additional credit will be severally affected.

I want you to call the ScotiaBank Student Loan Centre ASAP and get your student loan back on track. Their phone number is 1-888-284-3044.

P.S. To avoid having funds withdrawn from your bank account in the future, you will have to close your current account and open another bank account at a different bank, not a different branch of ScotiaBank. That way, you will be protected from ScotiaBank withdrawing funds from your bank account and applying those funds to your student loan.

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Educating one Consumer at a time

The loan was issued through algonquin college in 97 or 98. Back then they subsidized students by giving them provincial and federal loans. I paid the provincial loan but the federal loan has not seen a deposit for over 6 years nor have they taken any legal action against the loan therefore I'm guessing it's under SOL.

From my point of view, they took no action for over 6 years when I could hardly make enough money to get by. Now, I'm in a better place financially but after nearly 15 years of harassment (and yes, before this was strictly regulated I WAS being harrassed) and stress I'm not inclined to recognize this loan at all.

Is there anything I can do to negotiate the loan back down to the amount it was when it went into default? I don't want to talk to these guys because I don't want to say something that will imply that I recognize the loan thereby giving them free reign to garnish my wages and take further severe action.

Thanks for reading this footloose

You got it all wrong. Don't blame CBV. They had absolutely nothing to do with taking money out of your bank account.

Give me the month and year that you received this student loan. Can you confirm that this loan is a Canada Student Loan and not a Provincial Student Loan? When did you last make a payment on this student loan or give a written acknowledgement and signed by you to ScotiaBank?

Who originally issued this student loan? In which province/territory was this loan issued? Where do you currently do yur banking and from which bank were these funds removed?

If you can provide answers to these questions, then I can probably explain to you what is happening.

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Educating one Consumer at a time

Hi guys,

This is strange. CBV has taken out money on 2 occasions without a notice of wage garnishment, or any other type of official documentation. And here's the kicker. They took the money out of my WIFE'S account to which I've been added.

Furthermore, when we check our online records, the withdrawal doesn't come up as "Federal Student Loan" or "CBV collection Federal Student loan" it comes up as "Loan payment"... Seriously WTF?

How can a Collection Agency just take money out from my account when the loan has surpassed the statute of Limitations (6 years for Federal Student Loan from my understanding). Also, WHO took the money out? Where did it go? Why is there no record of this (we even called our bank and they did not have an answer to these questions) and what law gives them the right to just do this?

Any Help would be greatly appreciated

P.S. This is a federal student loan through Scotia Bank.