What Canadians Should Know If They Cannot Pay Their Student Loan
June 22nd, 2015 by NSS Admin
We are pleased to announce that we have published a series of articles under the heading of “What You Should Know If You Cannot Pay Your Student Loans”. This content is broken down into a series of four articles:
Student Loan Debt: Background Information
In this first of four articles dealing with unpaid student loans the reader will learn that debtors with unpaid student loans seeking relief under Canada’s insolvency laws are treated more harshly than those with other types of debt. In fact, student loans are not discharged, or forgiven, where a consumer makes a consumer proposal or files for personal bankruptcy less than seven years from the end of their post-secondary education. This article canvasses the available options for a person who is not in a position to make their payments on one or more student loans.
Read Article #1: Student Loan Debt – Background Information
Student loan debt and waiting periods
This article is the second in a four-part series on delinquent student loans. It focuses on those two scenarios in which a student loan is discharged under a consumer proposal or personal bankruptcy. A person who wants their student loans discharged, or forgiven, in a consumer proposal or personal bankruptcy can only do so where a certain number of years have passed since they ceased attending school. The reader will learn about waiting periods—more specifically the automatic discharge available for student loans where the seven-year waiting period is satisfied and the discretionary court-ordered discharge which might be available on the grounds of “financial hardship” where a person satisfies the five-year waiting period.
Read Article #2: Student Loan Debt – Student loan debt and waiting periods
Automatic stay of proceedings
This article is the third in our four-part series on delinquent student loans. Where a person files for personal bankruptcy or makes a consumer proposal then typically within 48 hours the Licensed Insolvency Trustee will receive a Certificate of Authority from the Bankruptcy Court. Once this occurs then automatically a stay of proceedings arises with respect to certain categories of debt, one of which is student loans.
As a practical matter, once the trustee receives a Certificate of Authority then not only can a consumer not be sued with respect to a student loan but also any existing lawsuits are suspended. This immunity from legal proceedings—with respect to certain categories of debt—continues until such time that the stay of proceedings is terminated. This article identifies those circumstances where a stay of proceedings is terminated.
A person who makes a consumer proposal or files for personal bankruptcy who cannot obtain an automatic discharge of their student loan debt by satisfying the seven-year waiting period or who cannot obtain a discretionary “court-ordered” discharge of their student loan debt by satisfying the five-year waiting period can, nevertheless, obtain some protection from creditors because of an automatic stay of proceedings.
Read Article #3: Student Loan Debt – Automatic stay of proceedings
Recommended Strategies and Tactics
This article is the fourth article in a four-part series on delinquent student loans. It provides five key recommendations for anyone who has, or anticipates, not being able to make their student loan payments.
These include the following:
- Avoid making a consumer proposal or filing for bankruptcy less than seven years after ending your post-secondary education
- Exhaust relief which might be available from your student loan provider
- Consider making small monthly payments on your outstanding student loans
- Explore opportunities to settle your outstanding student loan
- Consider using credit counselling as a short-term strategy to reduce your monthly payments to your creditors
Read Article #4: Student Loan Debt – Recommended Strategies and Tactics