Consumer Proposal – Student Loans

Consumer Proposals and Student Loans

Yes, consumer proposals can eliminate student loans.

The key question is: What was the last day of the month in which you concluded your studies?  As long as more than 7 years have passed since that day, then a consumer proposal will erase provincial student debt such as OSAP as well as federal student debt administered by National Student Loans.

If your not sure if 7 years have passed since you stopped studying you can call:

National Student Loans @ 1-888-815-4514, or
Ontario Student Loans @ 1-800-387-5604.

If your National Student Loan is in default, contact the Canada Revenue Agency collection department @ 1-866-864-5823.

If the money you borrowed to go to school wasn’t “government sponsored” it can be erased through a consumer proposal without waiting 7 years.

If it has been less than 7 years since you finished studying, interest on your student loans will continue to accrue, although you will not be required to make payments towards your student loan until your Trustee is discharged.   If your student loan is 9 months or more behind in payments at the time the government is notified of your Trustee’s discharge, you will have 30 days to bring your loan(s) up to date or it will be sent to the government for collection.

While you need to obtain Trustee authorization to pay the principal portion of your loan during your bankruptcy, you are allowed to make interest only payments without authorization.  If you choose to make payments they must be made in the form of a cheque or money order and cannot be made by pre-authorized debit.  If you are experiencing repayment difficulties you may apply for repayment assistance at any time.

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