How are student loans affected by a proposal or a bankruptcy?
It depends on the age of the student loan.
If the bankruptcy or proposal is filed more than 7 years since the end of your last semester using student loan funds, then the loan is dischargeable. When the process is done, the debt is gone.
If the bankruptcy or proposal is filed more than 7 years since the end of your last semester using student loan funds, the loan is still included in the consumer proposal or bankruptcy. No collection action can be taken against you during the process, but once the bankruptcy is discharged or the consumer proposal is complete, the loan is collectible again. Discuss this with your Trustee, as interest will still accrue, and you should have a plan to address it.
There is a provision in the Bankruptcy Act that if a person demonstrates true financial hardship, and the bankruptcy was file less than 7 years, but more than 5 years, after the last semester, the court may order that the debt does not survive.
Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.