Question: my last year of full time study was 4 years ago. Since then, I have been on interest relief on my loans (OSAP). I am considering declaring bankruptcy but don’t know whether or not this will help. I have done some research and understood that students loans are exempt for 7 years after last graduation. I am not able to pay back my student loans with my current financial situation. What can I do?
Student Loan Hardship Provision
Student loans are automatically discharged in a bankruptcy if you have “ceased to be a student” for more than 7 years. Since you were last a student 4 years ago, it has not been seven years, so your student loans would not be automatically discharged in a bankruptcy.
There is another rule that says that, in the case of extreme hardship, you can apply to the bankruptcy court to have your student loans discharged after 5 years (instead of 7).
One option for you would be to wait until your student loans are 5 years old and then go bankrupt. However, there is no guarantee that the court will discharge your student loans.
Further information can be found on the student loan bankruptcy canada web site.