Question: I have now been paying back my student loans (through a B.C. debtors assistance program) for almost ten years. (I live in Ontario now and have a canada loan and a BC loan.) Despite paying almost $30,000 I owe more now than I did when I started. I of course am considering bankruptcy at the ten year mark but am devastated that I will then have to wait another 7 years before I am clean (I am in my mid forties now) I wonder if there are other options. Am I able to offer my creditors a certain amount on the dollar to clean this up. A family member has offered to help me financially. Any advice that you may have would be greatly appreciated.
Answer: You have three options.
First, keep paying until the loans are paid off; this will have the best impact on your credit, but with the interest is obviously very costly.
Your second option is to declare bankruptcy. If you have been out of school for more than 10 years your student loans will be automatically discharged in the bankruptcy. The rules are somewhat complex; more information is available on the student loan bankruptcy canada web site. Once the bankruptcy is finished you can begin to re-build your credit. You are correct that the bankruptcy remains on your credit report for seven years, but if you have a good job and can save money you can generally re-build your credit in a much shorter period of time.
Your final option would be to file a consumer proposal, where you offer a settlement to your creditors. If you have family that can help, it may be possible to offer a lump sum to the creditors of an amount less than the full amount owing, and they may be willing to write off the remaining balance. Whether or not they will accept the consumer proposal depends on your level of debt, your family income, and your other assets.
You have options, so we suggest you contact a licensed trustee in Ontario for a no-charge initial consultation to review your options.