Canada Student Loan Bankruptcy Legislation

On Tuesday June 12 The House of Commons passed the Minister of Finance’s Ways and Means Motion, which is the first step before a bill dealing with taxation is introduced. This will include Bill C-62, the bill amending c. 47, which is the bill that is designed to make amendments to the Bankruptcy & Insolvency Act.
On Wednesday June 13 the Minister of Labour introduced Bill C-62 in the House of Commons, and it received First Reading.

There is speculation, as yet unconfirmed, that all parties will agree to fast-track the amending bill through First, Second and Third Readings in the Commons this week, without the need for committee hearings. This would enable the legislation to be sent directly to the Senate.

Unfortunately, it is now June, and Parliament will likely rise for the summer on June 22 (because we all need a three month summer break), so even if the bill passes the House of Commons the Senate will likely refer the bill to the Standing Committee on Banking, Trade and Commerce for public hearings, which are unlikely to occur before October, 2007.

You can read the text of the bill on the government’s web site.

Based on my quick review of the legislation I don’t see any changes to the student loan rules, but I may have missed them, or they may be added at the Committee stage. Stay tuned to this space for more information as it becomes available.

I have received a number of questions over the last few months from people wondering how to calculate the ten year period on their student loans (since a student loan less than ten years old is not automatically discharged if you file for bankruptcy in Canada).

It’s not the age of the student loan that matters; what matters is when you ceased to be a student. So, for example, if you received your last student loan in September, 1996 and graduated in May, 1997, the ten years is calculated from May 31, 1997, not from September, 1996 when you received the loan.

Obviously it is critically important that you wait until the ten years since you ceased to be a student has passed before you file for bankruptcy if you want your student loan to be automatically discharged.

To determine your end of study dates you can contact Canada Student Loans at 1-888-815-4514, and student loans from Ontario can contact Ontario Student Loans at 1-807-343-7260 to request your “end of study” date.

Of course no decision on filing for bankruptcy should be made before consulting a licensed bankruptcy trustee.