Can Bankruptcy Deal With My Student Loans?

More than ever, young Canadians are being crushed under the burden of student loan debt. In 2020, total student debt in Canada is at least $18 billion. There are more than 1.7 million student borrowers in Canada. The average student debtor owes at least $26,075.

The Bankruptcy & Insolvency Act allows student loan debt to be released if you ceased being a part-time or full-time student, at least seven years prior to filing personal bankruptcy or consumer proposal.

If you file personal bankruptcy or consumer proposal, and it has not been at least seven years since you were a part-time or full-time student, your student loan debt will not be released.

The National Student Loan Service Center will resume collection activity 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.” The Court can release you from your student loan debt if it has been at least five years since you were a part-time or full-time student. If the Court is satisfied that you have acted in good faith and will continue to experience financial difficulty, it may release you from a portion or all of your student loan debt.

If you are considering filing personal bankruptcy or consumer proposal, you should contact the National Student Loans Service Centre, to confirm your “end of study date.” Make sure it has been at least seven years since you were a part-time or full-time student.

Powell Associates Ltd. is a Licensed Insolvency Trustee. We are experienced, hands-on insolvency practitioners who understand the personal impacts of major financial stress;

• You won’t be stuck in an assembly line process.

• You will expect and receive prompt responses and resolution of issues from our supportive and experienced team.

• We will review your debt solution options, including filing a consumer proposal or personal bankruptcy.

• We help Canadians with overwhelming debt get fresh financial starts.

Once you file a consumer proposal or personal bankruptcy, we deal directly with your creditors on your behalf. Your unsecured creditors are required to stop contacting you or continuing legal proceedings against you. Contact us for a free consultation.

We offer free consultations to review your financial situation and practical debt resolution options. Contact us to discuss your situation over the phone, a video chat, or in-person in Saint John, Moncton, Fredericton, Charlottetown, Dartmouth, or Miramichi.