Are you struggling to repay your student loans and looking for help with student loan debt?
If you are looking for student debt relief you have several options to resolve student loans which may, or may not, involve bankruptcy. To help you reduce your student debt you can try any of the following options:
- Negotiate new student debt repayment terms.
- Apply for payment relief under government repayment assistance programs.
- Obtain student loan debt forgiveness through a consumer proposal.
- File bankruptcy to eliminate student debt.
Which option makes sense for you depends on how old your student loans are, whether your student debts are with a bank or are government guaranteed student loans, and what your budget can afford.
Our licensed insolvency trustees can help you review the pros and costs of each option and decide which will work for you. Here is some information you may want to talk about.
Eliminating Student Loan Debt and Bankruptcy Law in Canada
While bankruptcy eliminates most unsecured debt, there are special bankruptcy laws around the elimination of government guaranteed student debt like OSAP. Section 178 (1) of the Bankruptcy & Insolvency Act in Canada specifically excludes government guaranteed student loans if you have been a full or part-time student any time in the past seven years.
To put it simply, if you have been out of school for more than seven years 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 through a bankruptcy or a consumer proposal.
We know this can be confusing. Our Licensed Insolvency Trustees will discuss the treatment of your specific student loans during your consultation before you file.
What if my student loans were from my bank?
If your student loans are private bank loans, lines of credit or student credit card debts then these types of debts are eligible for automatic discharge under the BIA no matter how old they are. This is true for student loans that are not guaranteed by the Ontario or Canadian government.
If you are unsure about whether you student debt qualifies for elimination through a bankruptcy or consumer proposal, book a free consultation with one of our Licensed Insolvency Trustees to talk about your situation.
What do I do if my student loans are less than 7 years old?
If your student loan is less than 7 years old, then you still have options that can help make repayment of your student debt easier.
Negotiate new payment arrangements. Try contacting the student loans office to negotiate a new payment arrangement. Repayment assistance is available through the National Student Loan Service Centre and their Repayment Assistance Plan. You can:
- Ask for a temporary reduction in payments including making interest only payments.
- Ask for more time to repay your student debt. You can extend your payment period for up to 14.5 years.
- Apply for a hardship reduction. The government will reduce your interest costs for the first 10 years and may reduce the principal owing after 10 years. However, you must prove financial hardship to qualify, including meeting an income threshold and approval is not guaranteed.
Be aware that the first two options will keep you in debt longer and will increase the total interest you pay on your student debt.
The hardship option is the only option, other than bankruptcy or a consumer proposal, that will reduce the total student loan payments you make over time. If you are successful in negotiating new student debt repayment terms, do your best to maintain the payments to sustain your agreement.
What if I have more debts than just my student loans?
If you have other significant debts like credit card debts, lines of credit or payday loans, a bankruptcy or 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
If you are experiencing problems paying your Ontario student loan we can help.
We offer a free, no obligation consultation. One of our experts will personally review your situation and answer all your student debt related questions.
Let us help you choose the correct solution to resolve your student loan debts.Contact Our Team Today