Question: my last year of full time study was april 2004. since then, i have been on interest relief on my loans (OSAP), i also hold pre-1999 osap student loans with the bank. i am considering declaring bankruptcy. i had done some research some months back and understood that students loans were exempt for 7 years after last graduation. if i declare bankruptcy now, it is only to cover not paying back the student loans, since after 4.5 years, it is proving difficult. what is the newest legistlation on this issue and how can i declare bankruptcy and have my loans be included in the amount?
thanks.
Answer: Effective July 2008, the rule is as follows: Student loans are automatically discharged in a bankruptcy if you have “ceased to be a student” for more than 7 years. Since you were last a student in April 2004, it has not been seven years, so your student loans, even the ones from 1999, would not be automatically discharged in a bankruptcy.
There is another rule that says that, in the case of extreme hardship, you can apply to the bankruptcy court to have your student loans discharged after 5 years (instead of 7), so one option for you would be to wait until your student loans are 5 years old and then go bankrupt. However, there is no guarantee that the court will discharge your student loans.
Further information can be found on the student loan bankruptcy canada web site.