Student loans and Consumer proposal

How does a consumer’s proposal affect student loans? If one has a credit card debt and a student loan, can he or she initiate a proposal regarding the credit card debt only?

Posted from: Ontario

One Response to “Student loans and Consumer proposal”

A licensed trustee said...

The short answer is no, but it is not as simple as that.

If your haven’t been out of school for at least 7 years when you file a proposal then your student loans may survive the process. In that case, you have the right to continue making payments during your proposal. Unfortunately, the student loan lender has the right to submit a claim in the proposal anyway and collect money from it too (they can also choose not to file and just accept your monthly payments). You have the right during your proposal to stop making your student loan payments (of course interest will accrue).

So, you can’t choose to exclude your student loan debt from your proposal – the amount of your student loan debt will have an impact on how much you need to offer your creditors in your proposal.

This is complicated – discuss it all with a trustee BEFORE you make the decision to file.