March 16th, 2006 by Questions
Hello, well after two years of full time schooling and receiving very poor grades,it has been clear to me I cannot succeed in post secondary education. I have been living off student loans ($13,000) and a bank loan of ($10,000, co-signed by family member) to pay for school and living. I am freaking out and can’t imagine how my minimum wage job can begin to put a dent into my debt. I am feeling very low and never wanted to consider the option of bankruptcy at my age. Please let me know if filing bankruptcy would wipe out any of this debt. Or would it hand the debt over the co-signer? Thank you and I appreciate your anonymous blog area.
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March 16, 2006 at 10:23 am, Barton Goth, GCO Inc. Bankruptcy Trustees said:
First off, donâ€™t give up hope. Perhaps the program you took at school doesnâ€™t mesh well with your strengths; perhaps you have a better aptitude for other types of training. Whether it be re-examining the faculty you are in, or perhaps the type of training, there are many opportunities out there, the trick is you have to find the one that fits you.
If you filed a bankruptcy the bank loan would be cleared, but not the student loans. The Section of the Bankruptcy and Insolvency Act that deals with student loans is 178(1)(g). It sets two conditions under which a student loan may not be discharged by bankruptcy.
The first condition is that the bankrupt is still a student when they file.
The second is that it has been less than 10 years since the bankrupt ceased to be a full-time or part-time student.
The question seems to hinge on your status as a student. The Act doesn’t say it, but the general interpretation has been “a student continuing the same line of studies”.
As for the presence of a co-signer, if you file bankruptcy the co-signer is responsible to ensure that the debt is paid in full. If they do not continue the payments they will face the same consequences any other debtor would (i.e. tarnished credit rating, collection phone callsâ€¦).