We have written many articles over the years about student loans. We recently found the enclosed article which details the history of student loans and bankruptcy in Canada. It is reproduced in its entirety:
The short answer is yes. There is always a “But.” The review of the trustee in bankruptcy will take into account the following:
How long before the bankruptcy did you buy the car?
What did you pay for the car?
Did you pay cash? – if so, was any part of the cash from cash advances on your credit cards or from lines of credit?
If you financed all or part of the purchase price of the car, do you still owe money to the finance company? Did the finance company put a lien on your car as security until they were paid? If the answers are yes and you wish to keep the car, you will likely just continue to make the car payments and keep the car
What is the car worth on the day you filed the assignment in bankruptcy?
The answers to all of the above questions determine what action, if any, the trustee will take. Obviously, the length of time between the purchase of the car and the date of filing bankruptcy and the current value of the car are the two most important factors. If this situation applies to you, you would be wise to review the details with your trustee before you file bankruptcy.
Bankruptcy is a legal process governed by the Bankruptcy and Insolvency Act for a person who can no longer pay back debt. The person who owes the debt assigns all assets — with some exceptions which are governed by Provincial legislation — to a trustee in bankruptcy who sells the assets that are not exempt to help pay your debt to the creditors.
A Consumer Proposal is a formal offer by a debtor to creditors. This may include an offer to pay a percentage of the debt, pay back the debt over a period of time (maximum of 60 months), or some combination of both.
This option is available to individuals whose total debt does not exceed $250 000, not including debts secured by their principal residence.
Division I (Commercial) Proposal
A Division I (Commercial) Proposal is a formal offer by a debtor to creditors. This may include an offer to pay a percentage of the debt, pay back the debt over a longer period of time, or both. Unlike a consumer proposal there is no limit with respect to how much money is owed, nor is there a limit to the number of months that you may choose to make in your offer to make monthly payments.