When are Student Loans Discharged in a Bankruptcy in Canada?


Category: Bankruptcy Q&A

Question: I went bankrupt in 2009 and listed my student loan as a debt. I got the loans back in 1998. Are my student loans eliminated in a bankruptcy? or am I still liable?
Please help as I am trying to rebuild my credit.

Thanks
J

Answer: A student loan is eligible to be automatically discharged when you file bankruptcy in Canada if, when you declare bankruptcy, you have ceased to be a student for more than seven years.

So, in your case, if you ceased to be a student in 1998, and filed bankruptcy in 2009, that’s more than seven years, so they would be discharged.

NOTE: When you received the loan is not the key date; what matters is when you ceased to be a student.   For example, if you received the loan in 1998, and graduated in 2002 after completing a four year degree, your end of study date would be 2002, and that’s the date that matters.

In most cases your end of study date is the end of the last month that you were a student.  For example, if your final exam was on April 10, and you graduated on April 20, your end of study date is probably April 30.  If your end of study date is April 30, 2005, you would need to wait until May 1, 2012 to have “ceased to be a student” for more than seven years.

ANOTHER NOTE: Any creditor has the ability to oppose your discharge from bankruptcy, so even though the loan is past the seven year mark it is possible for the student loans people to oppose your discharge (although that would be unusual).

The rules are somewhat complicated, so we strongly recommend that you talk to a bankruptcy Canada trustee to fully understand the rules before you decide to file.