Consumer Proposals and OSAP / Student Loans
When weighing your options to deal with your debt, its important to consider the implications of your potential decision. Many debtors seek the help of a Licensed Insolvency Trustee to get a fresh start, and that fresh start often involves more education to increase their income and overall financial stability.
As such, we’re happy to provide the following synopsis of OSAP’s eligibility criteria as it relates to bankruptcy and consumer proposals below. You can find the application instructions in their entirety here.
The following questions appear on the 2020-2021 OSAP application form.
Q #610: Have you ever filed for bankruptcy or initiated a related event?
Q#611: Is your bankruptcy discharged?
Note: A Consumer Proposal is considered a “related event”
If you’re applying for OSAP during your consumer proposal (or bankruptcy) then you must provide OSAP with:
- A letter from your Trustee indicating that neither the Government of Canada or the Province of Ontario are a creditor in your consumer proposal; and
- None of the OSAP funding that you receive will be seized to repay any creditors.
Other debts to the federal or provincial government that were included in your consumer proposal may prevent you from obtaining funding from OSAP.
Assuming that you’re applying to OSAP and have no other debts due to the government then your consumer proposal should have no impact on your application, as the Trustee will be able to provide the required letter.
If you have previously negotiated student loans through a consumer proposal (or bankruptcy) after May 11, 2004 then you must provide proof that these loans have been discharged or paid in full.
If your previous student loans were not discharged, paid in full, or it has been less than 3 years since the loans were discharged or paid in full you must meet the following eligibility criteria:
- Proof that you have no outstanding student loans; or
- A letter from your educational institution confirming:
- You were enrolled in an approved program at an approved school when you filed you consumer proposal;
- You continue to be enrolled in the same approved program of study in which you were enrolled at the time that you filed your consumer proposal; and
- You have not had a break in studies of longer than six months since the date your filed your consumer proposal.
Basically, if already have taken student loans you either have to:
- Have paid them
- Discharged them through a past proposal (or bankruptcy) at least 3 years ago; or
- Stay in the same program, at the same school, without a break in studies of more than six months.
In other words, OSAP will continue to provide assistance to help you finish a program that you’ve already started in most cases, but won’t provide financing for a new program until the existing student loans have been paid or it’s been some time (3 years) since they were discharged.
If you answer “Yes” to both questions #610 & #611 meaning that you have been discharged from bankruptcy or completed your consumer proposal, then you must simply provide a copy of your bankruptcy search results. You can obtain a copy of these results by visiting this site, searching your name, and paying $8.00 to the Office of the Superintendent of Bankruptcy.
Conclusion
It is possible to have your application for OSAP approved even after filing a consumer proposal (or bankruptcy). That said, the criteria are specific and it is important to understand them so that you can weigh your options accordingly.
The information above presents a synopsis of the 2020-2021 OSAP eligibility criteria as it relates to bankruptcy and insolvency. Student loan eligibility criteria changes regularly, and Steve Welker and Company is not an expert on the eligibility criteria for student loans. If you remain concerned about your eligibility for OSAP, we recommend contacting your financial aid office directly.
To discuss your situation with a Licensed Insolvency Trustee, give us a call, or fill out our form. We’d be happy to review your circumstances and explain your options for free. Let us impress you with a prompt response.