Student Loans and CRA Debt

Student Loans and CRA Debt

Understanding Student Loans and CRA Debt Inclusion in Bankruptcy

Many individuals that seek my counsel often have a common understanding that typical debts like vehicle loans, credit cards, and payday loans can be incorporated in bankruptcy or a consumer proposal. However, they might not be aware that it is also possible to include Student Loans and CRA Debt. Let’s dive deeper into these two categories.

Student Loan Debt: An Overview

Student loans can create a significant burden on your finances, especially when you’re just starting out in your career. However, it’s important to note that such debts can be discharged under certain conditions.

Discharging Student Loan Debt

You can discharge student loan debts if you have been out of school for more than 7 years, whether you were a part-time or a full-time student. This option allows you to avoid bankruptcy and settle your student loan through a consumer proposal.

When Discharging Isn’t Possible

However, if you have been out of school for less than 7 years, student loan debt will not be automatically discharged by a bankruptcy or settled by a consumer proposal. You will remain responsible for the repayment of the debt.

Student Loan


“Even though your student loan debt may not be included in your bankruptcy or consumer proposal, there is a still a stay of proceedings in place.”


This essentially means a freeze on any debt collection or payments until the bankruptcy has been discharged or the consumer proposal has been completed. We recommend that you continue with payments to avoid accumulating additional interest if your budget allows.

Communication with Student Loan Provider

Your student loan provider may ask for a letter from your trustee consenting to the continuation of payments during the bankruptcy or consumer proposal period. This is a crucial step in maintaining good relations with your loan provider.

Government Debt: A Closer Look at the CRA

The Canada Revenue Agency (CRA) isn’t as forgiving as other creditors when it comes to a consumer proposal. They may not consider the same terms that credit card companies and financial institutions may accept since they never actually approved you for credit – your outstanding debt forcibly involved them.

Navigating the CRA’s Criteria

The CRA has a unique and more complex list of criteria you must fulfill before they will consider your proposal.


  • File all outstanding tax returns;
  • Your proposal must offer CRA more than what would be required under bankruptcy;
  • Demonstrate your ability to make the agreed-upon payments without missing them or accumulating more debt.


It’s worth noting that the CRA focuses on your ability to demonstrate honorable behavior. They do not look kindly upon failing to file taxes year after year.

Commitment to Paying Taxes

The CRA requires your commitment to paying your taxes going forward. They need assurances that you will be making all required payments from that point forward and continuing down an improved path.


Thus, if you are struggling with Student Loans and CRA Debt and are wondering if these can be included in bankruptcy or a consumer proposal, reach out to us today. We offer a free, no-obligation consultation. We will review your situation and come up with the best solution to meet your needs.

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