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If you have unsecured debt of under $10,000 and live in the Province of Ontario filing bankruptcy may not be the best option for you. We suggest you contact the Office of the Superintendent of Bankruptcy at 416-973-6441 to discuss your options, or you can visit their website here.

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Declaring Bankruptcy on Student Loans

I am currently $60,000 in debt from Cooking school in 1998 and University in 2007. I currently make $24,500 a year, and between my federal and provincial loans, my monthly payment is $520/ month (ammortized over 175 months).

I was unable to keep up with the payments since graduation, and have had interest relief several times. I am currently on my last term of regular interest relief and don`t know what I will do in November when the full payment comes up again.

Is there anyway to declare banruptcy on student loans if it has been less than 7 years? What does the goverment do if you are unable to make the full payment, but you are out of interest relief options? Thanks so much!

Posted from: British Columbia

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One Response to “Declaring Bankruptcy on Student Loans”

Barton Goth – Goth & Company Inc. -Trustee in Bankruptcy said...

You are correct that the standard rule dealing with bankruptcy and student loan is 7 years.

There is also a hardship provision in the Bankruptcy and Insolvency Act that stipulates that this time frame can be reduced down to 5 years if hardship can be demonstrated. There is no clear definition for what constitutes hardship; each bankruptcy court across Canada may use a slightly different definition. However, in general, hardship is a simple concept: having to continue to pay your student loans after bankruptcy would be a financial hardship for you.