Student Loans
I have student loans that are closing on 7 years age. I understand that there was some new revisions in the laws that was supposed to decrease the time from 10 years to 7 years before they can be included in a bankruptcy agreement. Can you elaborate on this? Is there a website where i can get up to date info on whether this bill is going to pass?
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 or a consumer proposal.
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”.
By that I mean if you started a BA, dropped out and then went back a few months/years later and completed your BA the clock would start after you completed your BA. (The last day you were registered as a student.)
Using a similar example, if you started a BA, dropped out and then decided to go to college to become a CNC operator they would probably start the clock when you ceased being a BA student (unless you borrowed more student loans to train for the CNC machine).
If there is any doubt as to whether or not your student loans are dischargeable you may ask your trustee to schedule a hearing and allow the Court to decide. Of course to do this you must have already filed bankruptcy and therefore you need to be prepared for whatever the Court might decide to do…
I hope this is of some assistance.
Unfortunately, the law was not enacted. The current standard remains in force – you must have been out of school for a minimum of 10 years in order for student loans to be included in a bankruptcy.
Keep an eye on the papers, if/when the law is enacted it will be big news…