Student loan debts can contribute to mounting, unpayable debt which may result in you filing for bankruptcy. However, some student loans may not be erased by bankruptcy. Whether or not your student loan debt is eligible for discharge depends on when you stopped being a full time or part time student.
If you attended school within the last 7 years your debt will not be erased by declaring bankruptcy, and you must repay it. Collections will stop while your trustee is administrating your file, but interest will continue to accumulate on your student loan debt.
If you file for bankruptcy 7 years or more after you were no longer considered to be a full time or part time student, your student loan debts are eligible for discharge and are erased by bankruptcy.
In some instances, if the court deems repaying your student debt will cause undue hardship, the court may reduce the period where your student loan debt is erased by bankruptcy 5 years after leaving school. You will have to make an application to the court directly, usually though an insolvency lawyer.
To determine your eligibility for this hardship provision, the court will examine your past financial activities, including how you used your student loan money and if you have completed your educational program. The court will enact this hardship provision only if they are satisfied that you:
Bankruptcy is always the final option. The federal government offers a Repayment Assistance Plan to help manage the repayment for provincial or territorial government student loans. This plan enables eligible borrowers to repay what they can reasonably afford.
Yes, you can apply for a student loan during or after your bankruptcy. However, often they will require some information from your trustee
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The staff at Kevin Thatcher & Associates are incredibly understanding, non-judgmental people who honestly advised me of all my options before I chose to go bankrupt. I was surprised at how easily they broke down the process for me step-by-step so I was able to meet all the requirements.
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