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Consumer Proposal and Studen Loan Discharge

I finished my schooling June 2006. I have a $30,000 loan debt. I filed for bankruptcy in January of 2011 and was discharged after 9-months in October. The student loan was NOT included as a unsecured debt which means it survived bankruptcy. The BIA states that if after 7 years from when the student ceases to be a student, if a consumer proposal is filed, the debt will be automatically discharged. SO HERE IS MY QUESTION… IF THE STUDENT LOAN IS THE ONLY DEBT WHEN I FILE A CONSUMER PROPOSAL, HOW WOULD THE PROPOSAL WORK BECAUSE IT IS SUPPOSE TO BE INCLUDED ALONGSIDE OTHER DEBTS STRUCTURED AS PAYMENT PLAN GARNISHED BY THE TRUSTEE??? SO CAN YOU FILE A CONSUMER PROPOSAL WITH ONLY A STUDENT LOAN DEBT???

THANKS!

Posted from: Alberta

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One Response to “Consumer Proposal and Studen Loan Discharge”

A licensed trustee said...

First, you may be able to have your student loans retro-actively included in the bankruptcy you have already completed. If your financial situation has not improved since you filed bankruptcy then you may bring an application to the Court to have your student loans included, if they meet the 7 year test now. The motion will likely cost you about $2,000 and is usually done by a lawyer.

To answer your question – yes, you may file a consumer proposal if your only debts are student loans. Something to keep in mind – proposals are accepted by a voting process. If you only have one creditor then there’s only one vote so you need to set terms that the student loans collector will agree to or the proposal won’t work… In cases like this it is difficult to predict how much of the debt you will be asked to repay – it depends on your current income and your future income potential.