Student Loans - Can They be Included in a Proposal?

We see debtors in financial trouble who owe money for student loans, in addition to other debt such as credit cards. Sometimes they are able to file a consumer proposal instead of a bankruptcy.

While changes to the rules have been proposed, as I write this only student loans older than 10 years old are automatically discharged in a bankruptcy or proposal. (Note: for an update on the new rules, go to www.student-loan-bankruptcy.ca. What does that mean? In a proposal, student loans can receive a share of the proceeds, but once the proposal is over, they can pursue you for the rest of the money they are owed.

Even worse, we have recently noticed a trend that student loans, when held by certain banks, are voting no to most proposals. In some cases, this means the proposal is rejected.

If you have student loan debt you can't pay, contact us to review your situation. We will meet with you and help you decide whether or not a proposal is the best option for dealing with your student loans.

Posted by Rebecca Martyn, CGA, CIRP, Trustee @ 3:45 PM

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