Thank you for your quick and detailed response. The information that you supplied gives me a a clearer picture of your situation.
It appears that this loan is the Federal portion of a student loan. In a previous post, you made some comments that leads me to this conclusion.
First, you said that in 2003, that you had settled a debt with Nordon Collections for the Provincial portion of your student loan and that this debt does not show on your Credit Report.
Second, you state that you have contacted both the Federal and Provincial governments and they have no record of any outstanding student loan with you. That means, that the Federal government has not guaranteed the Federal portion of your defaulted student loan. The Provincial portion of your student loan would have been obtained through OSAP ( Ontario Student Assistance Program ) as all Provincial student loans are automatically guaranteed by the Ministry of Training, Colleges and Universities. You had defaulted on the Provincial portion of the student loan, the Ministry then paid the financial institution from where you obtained the loan ( I assume the CIBC ) the defaulted portion, and now the Provincial government becomes the new creditor. They then assigned the collection of this defaulted student loan to Nordon Collections to whom you made a final settlement.
Third, you claim that you have always received your income tax refunds as well as your quarterly GST payments.
What has happened is that the Federal portion of your student loan obtained from the CIBC was never guaranteed by the Federal government. When you obtain the Federal portion of a student loan from a financial institution, the Federal government will pay the interest portion only during the period of time that you are in full-time attendance at a post-secondary educational institution and up to six months thereafter. If a financial institution also wants the principal portion of the loan guaranteed by the Federal government in the event of default by the debtor, then the financial institution must pay a premium monthly/annually to the Federal government. Unlike the Provincial portion of a student loan, of which the principal is guaranteed automatically by the Provincial government, the same cannot be said for the Federal portion of student loans.
In your case, the CIBC has elected not to pay a premium to the Federal government to guarantee the repayment of the Federal portion of this defaulted student loan. However, your situation becomes somewhat cloudy at this point because it is not clear to me as to who actually owns this debt.
You claim that on your Credit Report, this debt is shown as an I9 and that is correct. You further state that under the Status heading, it shows Bad Debt, Unable to Locate ( or words to that effect ) This would indicate to me that this debt has been SOLD, not assigned to CBV.
When you attempted to negotiate the settlement of this debt with CBV, the person to whom you were speaking said that she would first have to get the approval of CIBC before agreeing to a final settlement Also, when you contacted CIBC, about this debt, they told you that CBV now has the file. When a debt is assigned to a collection agency, the file remains with the original creditor. A file is only transferred to a collection agency or debt buyer when a debt has been sold. It appears to me that this debt is owned by CBV and having to get the approval of CIBC before a negotiated settlement can be made is strictly a "smokescreen".
The original student loan was for $9,995 and from the time of default until this debt was sold, interest had accummulated making the total debt owing $10,436.15. In my view, CIBC has sold this debt to CBCL which was later absorbed by CBV for pennies on the dollar. Because this debt was sold and not assigned to CBCL/CBV there is no agreement in place between you and CBCL/CBV for the payment of interest other than what CIBC has charged when the debt was sold. Therefore, the charging of interest by CBV is illegal. In order for CBV to legally charge interest on this debt, they would first have to obtain a court order which I am sure they do not have. This is just another attempt by a debt buyer to extract more money from a debtor.
Unfortunately, you currently are between a "rock" and a "hard place". In order to obtain your mortgage, you must first pay off this debt. This has become standard practice for all financial institutions granting mortgages whose applicants have an outstanding and unpaid student loan.
You are now faced with two options. Attempt to seek out a lender, through an independent mortgage broker, who will grant you a mortgage with an outstanding student loan showing on your Credit Report. No bank will do this so that means a private lender may overlook this and grant you a mortgage. If you can find a lender who will grant you a mortgage, then you have time to negotiate the repayment of your unpaid student loan. Keep in mind that the starting point to negotiate is $10,436.15, not $14,031.14. If this fails, and you still want to proceed with the obtaining of a mortgage, then you will have to negotiate a settlement with CBV. It appears from your posts that you have only been dealing with front line personnel. It now becomes imperative that you deal with senior personnel to negotiate this student loan. I have seen many people with debts as old as yours successfully negotiate the debt for 50%. I would suggest that you make CBV a cash offer of $5,000 in full settlement of this debt.
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