Do my student loans still have to be paid even if I go bankrupt?

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Larry Crandall, Licensed Insolvency Trustee

Yes, but with some exceptions.

If you ceased to be a full-time or part-time student more than seven years before declaring bankruptcy, your student loans will be extinguished when you are discharged from bankruptcy.

If the period between your termination of studies and bankruptcy is less than seven years a student loan guaranteed under a federal or provincial program will survive your discharge from bankruptcy. You continue making payments.

After five years, however, the Bankruptcy and Insolvency Act permits an application to the Court for waiver of your obligation if you experience, and will continue to experience, financial difficulty. The Trustee can help you with the application to the Court.

As well as proving this level of hardship to the Court, you will be required to show that you acted in good faith in connection with your student loan. You may be asked how you used student loan money, how you have used your education, how diligently you have tried to repay the loans and whether you have stayed in touch with the lender and appropriate government agencies, availing yourself of interest relief plans and other repayment programs.

New Repayment Assistance Plan 

As of November 1, 2016, the Canadian government put new measures in place to help recent post-secondary graduates manage their student debt. Canadians don’t have to repay their Canada Student Loan until they’re earning at least $25,000 a year.  Learn more…

If you have questions or would like to have a free consultation with one of our trustees, contact one at our location nearest you.