Individuals across the Maritimes contact Allan Marshall & Associates Inc to inquire about student loan debts and often we are asked similar questions. Some of the common questions are answered below.
Does bankruptcy help with student loans?
Yes, bankruptcy can help with student loans.
There are of course conditions that need to be met before bankruptcy can help discharge a student loan.
- If a student has been out of school, full or part time for 7 years or more then the student loan can be discharged under the bankruptcy process.
- If a student has been out of school, full or part time for 5 years but less than 7 years, then a bankrupt can apply to Court to have their student loans included as a part of their bankruptcy.
- In order for the Courts to agree to allow the student loan to be discharged, after only 5 years out of school, the Court must be convinced of the following:
- The student must convince the Court they have and will continue to experience financial hardship even after the discharge of their other debts.
- The Student has acted in good faith and made reasonable efforts to repay their student loans.
Can you get student loans while in bankruptcy?
- As of May 11, 2004 Students who declare bankruptcy while still students are now eligible for the following benefits:
- Possibly continue to receive student loans for a further 3 years to complete their studies.
- Retain their interest free status while students
- Apply for interest relief
- After interest relief may apply for debt reduction
- In most cases you would be advised to contact the appropriate student loan office to enquire your ability to get continued funding during or after a bankruptcy.
- Bankrupt’s applying for new student loans (Not continuing an existing course of study) are advised to talk to their student loan representative as approval is granted on a case by case basis.
For more information as to availability of these benefits you may contact: National Student Loan Services Centre
Public Institutions Division 1-888-815-4514 Private Institution Division 1-888-587-7452