Student Loan Bankruptcy Some Recent Changes

As some readers of this blog may be aware, certain changes to the Bankruptcy and Insolvency Act were brought into force on July 7th, 2008. One of those changes related to bankruptcies where Student Loans was a creditor. Prior to this change you could not be released from student loan debts unless you have been out of school more than ten years on the date you filed bankruptcy. The provision now reads that you have to have been out of school seven years on the date your receive your dischage. It is therefore possible that certain individuals who filed prior to July 7th will find that their student loans ARE released at the conclusion of their bankruptcy even though that had not been anticipated at the date of filing. I am not sure if this change was intended or not, but the wording of the act appears to be retroactive, and the above is consistent with the information published on the Superintendent of Bankruptcy's web site. A bankrupt can now also make an application to the court for relief under the hardship provisions of the Act if they have been out of school for five years. The requirements for what consitutes "hardship" do not appear to be well established, at least here in Saskatchewan, so I suggest anyone seeking to make such an application should likely consult both their trustee and legal counsel as well. Please note that proposals work differently, and you should consult one of our insolvency professionals if you wish to file a proposal and have student loan creditors. As always, call us, or post your questions here. Ian Schofield MNP Regina 306-790-7904