Navigating Consumer Proposals and Student Loans
In the face of mounting student loans, many individuals may find themselves considering Consumer Proposals as a viable solution. This article aims to provide a comprehensive guide on how to navigate the intricacies of Consumer Proposals and their intersection with Student Loans.
Understanding Consumer Proposals
Consumer Proposals are debt repayment plans legally binding for both the debtor and the creditors. They offer a feasible alternative to bankruptcy, allowing individuals to pay back a portion of their debt over a specified period without the fear of interest charges piling up.
Exploring Student Loans
While Student Loans provide access to higher education and better career opportunities, they can also be a source of significant financial stress, especially when repayment becomes challenging due to unforeseen circumstances like unemployment or health issues.
The Intersection: Consumer Proposals and Student Loans
In the context of Canada, student loans through the Canada Student Loans Program can be included in a Consumer Proposal if they are more than seven years old. This is contingent on the end-of-study date being more than seven years prior.
The Seven-Year Rule
The seven-year rule stipulates that student loans are only dischargeable under a consumer proposal or bankruptcy if the end-of-study date is more than seven years ago.
The Five-Year Provision
If your Canada Student Loan is less than seven years old but more than five years old, there is a provision for a debtor to apply to have their student debt included in either their bankruptcy or consumer proposal.
The Role of Bankruptcy Trustees
A bankruptcy trustee can provide valuable guidance in these situations, especially when it comes to deciphering the end of study date, which can often be confusing.
Contacting Canada Student Loans
If you are contemplating bankruptcy, it is advisable to contact Canada Student Loans to confirm the end of study date they have on file.
The Issue of Returning to Studies
If you returned to school after initially obtaining your student loans, the ‘clock’ does not reset on the student loan. However, this issue can be complex and should be discussed with a trustee for clarification.
Demonstrating Good Faith
It’s important for debtors to have acted in good faith when taking out and attempting to repay their student loans to be considered for the five-year provision.
Determining Undue Hardship
In addition to demonstrating good faith, debtors must also show that they would experience undue hardship if they had to wait a further two years for their student loans to be included in their bankruptcy or consumer proposal.
Reaching Out for Help
If you have questions about consumer proposals and are wondering if your student debt would be included, it’s advised to contact a professional in the field.
In conclusion, consumer proposals can be a lifeline for those struggling with student loans. However, navigating this terrain requires a firm understanding of the rules and regulations surrounding these financial strategies, and professional advice can be instrumental in this regard.