Bankruptcy Canada Student Loans
You’ve graduated from college, and you have your degree – along with a mountain of Canada student loan debt. Unfortunately, with the current state of the economy, repaying that Canadian student loan may prove difficult, even if you have found employment. You need to know about bankruptcy laws for Canada Student Loans, since bankruptcy may be your only viable option for getting out of debt.
Bankruptcy Laws Canada Student Loans
Fortunately, a new law was passed in Canada on July 8, 2008. Unfortunately, this law only applies to you if you have been out of school for at least seven years. In the past, you had to be out of school for ten years, and the administrator of your Canada student loans could actually take funds from your Registered Retirement Savings Plans, also known as RRSPs, to repay your student loans. Under the new law, this is no longer allowed. However, funds that have been contributed to your RRSP during the year prior to filing for bankruptcy are at risk for seizure.
In some cases, the judge in bankruptcy court will discharge your Canada student loan debt if you have only been out of school for five years, if you can prove that continuing to pay the debt, even after other debts have been discharged, would still create financial hardship for you, but this is rare.
If it has not been seven years since you have graduated or left school and your student loans are causing you extreme financial hardship, contact the administrator of your Canadian student loans to see if lower payments can be made, or if payments can be deferred for a specific period of time. In some cases, the principle portion of the payment will be deferred – or put off until a later date – but only if you continue to make the interest portion of the payments.
Additionally, the Canadian Government may actually forgive a portion of your Canada student loans – without you filing for bankruptcy. This happens more often than you might think. There is no set percentage that will be forgiven, but you can be certain that the entire amount will not be forgiven – you will still owe money. However, if some of the loan is wiped out, this will significantly lower the payment. You can find out if this is possible through your loan administrator or service centre.
Failing all of this, contact a Consumer Credit Counselor to see if they can negotiate a lower payment for your Canada student loans. This is almost always a better option than bankruptcy, or negotiating yourself, as the results are usually more favorable for you. There are many options open to you aside from bankruptcy, and those options should be explored thoroughly before taking any other action. If you do decide that bankruptcy is the way to go, you will need to get in touch with either a Bankruptcy Attorney or a Bankruptcy Trustee.
Canada Student Loans Bankruptcy Resource
For more information, or to find out how to file go to bankruptcy Canada student loans. Additionally, you should check with the administrator of your Canadian student loan to determine whether you are eligible for assistance.
Related Reading on Student Loans in Canada
Non Government Student Loans in Canada.
Canada Student Loan Debt for Canadian Students.
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