If your student loan is more than seven years old from the date you ceased to be a full- or part-time student, it is considered a dischargeable debt, meaning that you would not be required to pay the balance remaining should you file bankruptcy. There has been some confusion with this in that past as people aren’t sure when the seven years is up. It has nothing to do with the age of the loan. The seven years starts on the day you cease being a student.
If you have other debt on top of your student loan debt and are struggling to pay that, there is hope. If you decide to file bankruptcy and your seven years isn’t up yet, you can still benefit from a stay of proceedings. This prevents your creditors from taking further action to collect on your debts, including student debt.
If your debts are eligible for automatic discharge in a bankruptcy then, once your bankruptcy is completed, your debts go away. No further payment is required.
If your student debts are less than 7 years old however, your student loan lender, even the government, is still unable to collect while you are bankrupt or in a consumer proposal. You can, however, opt to continue to make payments against your non-dischargeable student debt while in a consumer proposal. Many find this feasible since their credit card and other debt payments, have been eliminated.
The bottom line is, if you’re struggling with debt, it’s important to take action immediately. If you have questions, contact our office today. We will be able to answer all of your questions and determine if bankruptcy is the right option for you.
the loan is included in the bankrupt (or proposal) there is a Stay of Proceedings against the creditor but the debt SURVIVES. This means that once you are discharge from bankruptcy or the proposal is completed you will be required to make arrangements to pay the remaining balance and the interest will continue to accrue. In some circumstances if the debt is more than 5 years but less than 7 years old, you can seek an Order from the Court discharging you from the debt but this is dependent on your situation and ability to pay (based on hardship).
