Student Loans and Bankruptcy
You’ve finished school. Despite your best efforts, a challenging economic climate has prevented you from finding work in your field. You don’t want to fall behind on your student loan payments, but it’s hard to keep up with them when cash is limited and you also have other bills to pay.
You might be wondering about how bankruptcy can affect your student loan payments. We’ve provided important facts for you to consider about student loans and the bankruptcy process:
- Unlike other unsecured debts, filing for bankruptcy will not eliminate your obligation to make your student loan payments, unless you have been out of school for at least 7 years prior to filing, whether as a full-time or part-time student.
- If you have been out of school for over 7 years and are considering bankruptcy, you will be able to ‘discharge’, or eliminate the loans, provided your creditors do not oppose the discharge.
- As an alternative to bankruptcy, you may also consider filing a consumer proposal which reduces your monthly debt payments by negotiating to repay only a portion of your total debt. You can speak to a Licensed Insolvency Trustee who will assess your situation and work with you to find the best solution for managing your student debt, whether through bankruptcy or a consumer proposal.
- Only a consumer proposal or filing for bankruptcy can reduce or eliminate your student loan debt obligations.
What can I do if I have just finished school, don’t qualify to discharge student loans through bankruptcy and can’t maintain payments?
You have many options available to you if you are a recent graduate and realize you’re having a hard time repaying your loan:
As always, our local debt professionals will be happy to review all of the options available to you. Whether you are eligible to discharge your loans through a bankruptcy or not, we will personally guide you through all the methods and steps you can take to eliminating your student debt. Request a call today for a free assessment, with no obligation.