1-855-514-9358Question: I owe a great deal of money to the Royal Bank as a result of pursuing a Law degree. I have graduated law school. I am curious if it is possible to declare bankruptcy in Toronto on an RBC unsecured professional student line of credit (+65k). I heard that loans that go toward a professional designation (i.e. JD in law) are omitted. Is this the case?
Answer: Yes, you are correct. If you obtained a loan from a bank for the purpose of pursuing a professional designation, and you are currently working using that designation, it is likely that the bank will oppose your discharge from bankruptcy, and the bankruptcy court in Toronto will require you to repay most, if not all, of the loan. There are numerous cases on this point. This is particularly an issue if you live and work in a big city like Toronto, because that is where these types of professional jobs are most common.
Your first option will be to talk to the bank and work out a repayment plan. Your next option may be to offer a consumer proposal.
As this is a very complicated area of law, we would also strongly recommend that you consult an insolvency lawyer experienced in these matters.
NOTE: Your question refers to a student line of credit, not a government guaranteed student loan, such as OSAP. If this was a government guaranteed student loan, it would be automatically discharged if you filed bankruptcy in Toronto if you filed bankruptcy seven years after you ceased to be a student (subject to the normal bankruptcy conditions).