Student off the hook for $50k credit line

A former high-achieving Halifax university student who lost a big chunk of a $50,000 Royal Bank student line of credit by investing in stocks online won’t have to pay up.

Alfredo Jeremy Abdo, 23, has been given an absolute discharge from bankruptcy, said a written decision released Wednesday by a Nova Scotia bankruptcy court.

The Royal Bank was owed $58,200 with interest, on Mr. Abdo’s line of credit, and $2,613 on a separate loan when Mr. Abdo filed for bankruptcy. The bank argued that the former Dalhousie University engineering student should have to make a substantial payment as a condition of discharge from bankruptcy.

A court hearing was held Oct. 15.

Bankruptcy court registrar Richard Cregan disagreed with the Royal Bank and dismissed its argument that Mr. Abdo had filed for bankruptcy to avoid repaying his debt to the bank.

The bank increased Mr. Abdo’s line of credit when it was clear the money wasn’t being used to fund his education, Mr. Cregan said in his decision.

"Clearly, this was not an advance for the aid of Mr. Abdo’s education, but an advance to relieve him from investment difficulty," he said.

"It may also fairly be said that, at least in part, RBC is responsible for the situation. Furthermore, it does not necessarily follow that discharging (Mr. Abdo) absolutely would be an affront to the integrity of the insolvency system."

Mr. Abdo, who had a 4.06 grade point average during his first year studying engineering, later switched to commerce. He quit university after 2½ years.

Somewhere along the line, the scholarship student, who was also athletic and active in fundraising, "did not have the emotional resources to keep it all going," the decision said.

He withdrew into a "comfort zone" and has no gainful employment. He suffers from dizziness and is living with his mother, who supports him, Mr. Cregan said.

"Having observed him, I think it is fair for me to say that he has very serious health problems, and I mean that in the widest sense, the most serious aspect of which is that he does not see that he should seek help."

Mr. Abdo was 19 and had finished his first year at university when he arranged a $20,000 line of credit with the bank. The line of credit, arranged in Aug. 31 2005, is made available to students in professional courses like law, dentistry and engineering who are expected to find well-paying jobs at graduation, said the decision.

Before the end of the year, Mr. Abdo had financial difficulty as a result of money lost on investments and called on his Royal Bank loans officer for advice.

"It appears that, along with his studies, he was seriously involved in online investing and quickly was in over his head."

To solve the problem, the loans officer offered to advance him a further $30,000 on his line of credit, the decision said.

Mr. Cregan questioned if Royal Bank’s actions were prudent.

During the course of his studies, Mr. Abdo had also received two $8,000 scholarships.

"He had a scholarship, which would have covered his tuition. It appears that his lifestyle is modest. He lived at home. I question whether advancing all that money at one time was prudent banking on the part of RBC."


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