Do I Have To Continue Paying Student Loans During My Bankruptcy or Consumer Proposal?

If it has been at least seven years since you were a part-time or full-time student, you should not have to continue paying your student loan after you complete your bankruptcy. You can also avoid bankruptcy and settle your debts, including your student loan, by filing a consumer proposal.

However, if you have been a part-time or full-time student within the last seven years, your student loan debt will not be automatically discharged by a bankruptcy or settled by a consumer proposal. You will be responsible for repaying your student loan debt after your bankruptcy or consumer proposal is completed.

Even if the student loan debt will not be released by your bankruptcy or consumer proposal, there is still a stay of proceeds that stops collection activities until you have completed your bankruptcy or consumer proposal.

However, because the student loan debt is a non-dischargeable debt that will survive your bankruptcy or consumer proposal, interest will continue to accumulate on this debt. Therefore, we recommend that you make arrangements to pay at least the interest every month. The National Student Loan Service Centre might ask for a letter from your trustee consenting to the continuation of payments during your bankruptcy or consumer proposal.

If you are considering filing bankruptcy or a consumer proposal, you should contact the Canada Student Loans Service Centre to confirm your “end of study date” to make sure that it has been at least seven years since you stopped being 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 significant 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.