Can Bankruptcy Deal With My Student Loans?
More than ever young Canadians are being crushed under the burden of student loan debt. According to the Canadian Federation of Students, the average student loan debt now stands at over $28,000 for students from the Maritime region.
Bankruptcy legislation allows Canadian student loan debt to be discharged in a bankruptcy if the bankruptcy occurs at least 7 years after you ceased to be a part-time or full-time student.
If less than 7 years has passed and you go bankrupt, the student loan will survive bankruptcy and payments and collections will resume once you have completed your bankruptcy. However, there is still potential for relief from the student loan as the Bankruptcy legislation includes a special “hardship provision”. This provision allows someone who has gone bankrupt and who has not been a part-time or full-time student for at least 5 years, to apply to Court seeking to have the student loan discharged. Under this provision, you will be discharged from your student loan debts only if the Court is satisfied that you have acted in good faith in connection with your obligation to repay your student loans and have experienced, and will continue to experience, financial difficulty that will prevent you from repaying the student loan.
If you are considering bankruptcy you can contact the Canada Student Loans Service Centre to have them confirm your “end of study date” to make sure that it has been at least 7 years since you finished your studies.
For a free consultation over the phone or in person in Saint John, Moncton, Fredericton, Charlottetown or Dartmouth, please contact us. Powell Associates Ltd. is a licensed insolvency trustee focused on providing debt settlement, proposal and bankruptcy solutions for individuals and businesses.