When you declare bankruptcy or file a consumer proposal, most—but not all—of your debts are discharged at the end of your bankruptcy/consumer proposal term. This means your debts are forgiven (in bankruptcy) or considered paid in full (in a consumer proposal), and you’re no longer liable for them. Your student loans, however, may be among those that are not discharged (others include alimony, child support, debts due to fraud, and court-imposed penalties).
How is this decided? In Canada, the seven-year rule applies to federal and/or provincial student loans: if you’ve been out of school for fewer than seven years, student loan debts survive both bankruptcy and consumer proposals. This means that you’ll have to continue paying them during and after your bankruptcy period.
But not all hope is lost.
There are several paths you can take to help you deal with student loan debt:
If you’d like more information about dealing with your student loans and other debt, call us today to schedule a free, no-obligation consultation: in Ottawa call 613-237-5555; out of town, call toll-free 1-800-517-9926 or book online now.