Student Loan Bankruptcy Law in Canada
Are you struggling to repay your student loans and looking for help with student loan debt? Good news! You have several options to resolve student loans which may, or may not involve bankruptcy.
The Bankruptcy & Insolvency Act in Canada will eliminate student loans if you've been out of school for more than seven years. That means that your student loan debt will be eliminated if:
- you declare personal bankruptcy or
- if you make a debt proposal to your creditors through a consumer proposal.
If it has been less than seven years since you were a student, your government guaranteed student loan will not be automatically discharged if you file bankruptcy or may not be included in a consumer proposal.
What to Do if Your Student Loans Are Less Than 7 Years
If your student loan is less than 7 years old, then you still have options to repay your student loans:
- Make payment arrangements: Try contacting student loans office to negotiate a new payment arrangement. If you are successful, do your best to maintain the payments to sustain your agreement.
- Credit Counselling: If you cannot maintain your payments you may want to meet with a credit counsellor. They will summarize your debts; create a multi-year repayment plan and then negotiate with your creditors. This process is called a debt management plan.
- If you have other significant debts, bankruptcy or a consumer may still be a good option. Filing bankruptcy can help clear other debts and make repaying your student loan more manageable.
Eliminate and Resolve Student Loan Debt
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