The Office of the Superintendent of Bankruptcy Canada provides four (4) debt relief options for individuals facing insolvency and student loan debt:
Where student loans have become part of an overwhelming debt where you’re facing insolvency, bankruptcy can be a viable option.
In bankruptcy, student loans can be discharged (forgiven).
Student loans are included in bankruptcy where seven years have past since you finished being a full or part-time student.
Where the student loan is discharged in bankruptcy, you are released from the obligation to pay the loan. This debt as well as any others are cleared in bankruptcy.
The seven year waiting period for student loan bankruptcy can be reduced to five years where repaying the loan causes undue hardship.
Where five year or more have passed since you were a student, you may apply for an early discharge under the “hardship provision“.
The student loan hardship provision has the following conditions for the bankrupt:
The bankruptcy courts look at “did the bankrupt act in good faith”, meaning:
Where the court is satisfied that the bankrupt acted in good faith with financial difficulties, the student loan can be discharged after five years.
Student loans can be included in a consumer proposal.
Where a student applies for a consumer proposal and the consumer proposal is accepted the student loan is not discharged but reduced.
The amount can be reduced 70% or more. Many people including creditors may consider a consumer proposal less invasive than bankruptcy.
Where you’re considering insolvency, we invite you to discuss which option would be better for you.
Questions about student loans and bankruptcy? I invite you to call our office to speak to myself or one of our insolvency trustees.
We’re happy to speak over the phone or in-person at one of our offices.
Where you have questions or need some advice, please feel free to give us a call without cost or obligation.
Call us today at 905-721-7506.
D. Ganguli
2 weeks ago
★★★★★ Some bad financial decisions including being laid off resulted in huge credit card debt and other loans we were never going to be able to pay off. After I finally got fed up with the collection calls and bills my husband and I decided to get some help. We decided on bankruptcy giving up many things we didn’t really need, and the counseling was great for us at our age. It wasn’t easy, but we are much happier and debt free. Thanks Again, would recommend.
Jo-anne Lee
1 month ago
★★★★★ I needed to get out of debt. I still had a student loans of $14,000, credit card debt and had just received a letter of garnishment. A credit counselor recommended I look into filing for bankruptcy. The bankruptcy trustee was easy to speak with and listened to me. Together we discussed the pros and cons and options available. The bankruptcy will pass, but I’m much happier without the burden of debt in my life. I should have gotten the financial counseling years ago.
Call 905-721-7506
