Can Student Loans Be Discharged in Bankruptcy in Canada?
Student loans are one of the most stressful forms of debt for Canadians. With interest rates rising and government repayment programs tightening, many people wonder:
Can student loans be discharged through bankruptcy or a consumer proposal in Canada?
The short answer is yes — but only under certain conditions. This guide explains:
- The 7-year rule
- What happens in consumer proposals
- The hardship provision
- What to do next if you’re struggling with student loan debt
Understanding the 7-Year Rule in Canada
Under the Bankruptcy and Insolvency Act (BIA):
- Government student loans (OSAP, CSLP, etc.) are not dischargeable unless 7 years have passed since you last attended school
- This includes full-time or part-time attendance
- The 7-year countdown starts from the last day you were enrolled
What If It’s Been Less Than 7 Years?
If it has been 5–7 years, you may still qualify under the hardship provision.
To qualify, you must:
- Show you’ve made a good-faith effort to repay
- Demonstrate that repayment will cause ongoing financial hardship
This requires a court application and trustee assistance. It’s not automatic — but it’s possible.
Can Student Loans Be Included in a Consumer Proposal?
Yes — but the same 7-year rule applies.
If your student loans are older than 7 years, they are included like any other unsecured debt. If not, they remain owing even if other debts are reduced.
However, proposals can free up enough monthly cash flow to help you stay current with student loan payments.
What About Private Student Loans or Lines of Credit?
Private student debt — like bank-issued student lines of credit or co-signed personal loans — can be discharged in both bankruptcy and proposals.
| Loan Type | Dischargeable? |
|---|---|
| OSAP / CSLP | Only after 7 years |
| Private line of credit | Yes |
| Credit card for tuition | Yes |
| Co-signed bank loan | Yes (your portion only) |
Real-World Example
“I was 9 years out of school, still paying on my student loans, and falling behind. My trustee explained that I qualified under the 7-year rule. Filing bankruptcy helped me eliminate the loans, start rebuilding credit, and focus on my career.”
– Sara, 33, Windsor, ON
Common Questions About Student Loans and Bankruptcy
Yes, but only if it’s been more than 7 years since you were last a student.
It’s a court-based option allowing early discharge (after 5 years) if repayment causes serious financial difficulty.
Yes — they’re treated like credit cards or other unsecured loans.
No. The rule counts from the last date of attendance, not graduation.
Yes, but it also wipes out the debt and starts your credit recovery clock.
You may be restricted from future student loans for a period. Check with your provincial lender.
What If I Don’t Qualify Yet?
If your student loans aren’t yet eligible for discharge, here are your options:
- File a consumer proposal to reduce other debts and free up cash flow
- Apply for Repayment Assistance Program (RAP) with your loan provider
- Seek help from a Licensed Insolvency Trustee to create a plan
- Wait until you hit the 7-year threshold, then file
Next Steps: Talk to a Licensed Insolvency Trustee
Student loans are overwhelming — but you’re not alone.
Book a Free Confidential Consultation
Find a Trustee Near You
A Licensed Insolvency Trustee will review your student loan status, help you understand your discharge eligibility, and recommend the best path forward.