CRA Collections
Student Loans


How does Bankruptcy or a Consumer Proposal affect my Student Loans?

If you have not been a student for at least seven years, filing for bankruptcy can discharge your student loans.

The Court, on application, can discharge your student loan if:

  1. You can prove hardship (you have been bankrupt) and have ceased to be a student for at least five years.
  2. You have acted in good faith in connection with your obligation to repay your student loans. The courts consider how your student loan money was used, your efforts to complete your education program, your efforts to repay the loans and the use of available repayment assistance programs (Repayment Assistance Plan).
  3. You have experienced, and will continue to experience, financial difficulty that will prevent you from repaying these debts.

In a Consumer Proposal, Student Loans must vote for the Proposal.

You can apply to the Repayments Assistance Plan (RAP) and the Repayment Assistance Plan for Borrowers with a Permanent Disability (RAP-PD) through the Federal and Provincial Governments. Depending on your income, you may not be required to make payments, and you can always apply for RAP/RAP-PD). Apply as soon as you start to repay your student loans, and if you are eligible, the government will pay the interest owed.

After 60 months (five years hardship clause to have your student loan discharged) or ten years after you finish school, whichever comes first, the government will begin to cover the principal and interest.

As long as you remain eligible for RAP, your loan balance is gradually paid off, and the obligation will not exceed 15 years. Re-enrolment is not automatic. You must reapply every six months.