Debt to Government of Canada | General financial discussion | Discussion forum

Please consider registering
guest

sp_LogInOut Log In sp_Registration Register

Register | Lost password?
Advanced Search

— Forum Scope —




— Match —





— Forum Options —





Minimum search word length is 3 characters - maximum search word length is 84 characters

sp_Feed Topic RSS sp_TopicIcon
Debt to Government of Canada
October 29, 2022
7:42 pm
HermanH
Member
Members
Forum Posts: 800
Member Since:
April 14, 2021
sp_UserOfflineSmall Offline

I seem to remember that if someone has taken out student loans and is indebted to the Government of Canada, then that debt is eternal, regardless if the individual declares bankruptcy. Is this correct?

Is there a name for this type of debt?
Is student debt the only type not cancelled by bankruptcy or are there others?

October 29, 2022
8:29 pm
Norman1
Member
Members
Forum Posts: 5706
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

No, that's not correct.

Student loans are not eternal. But, they cannot be discharged by bankruptcy within seven years of ceasing to be a student.

Details are in Bankruptcy and Insolvency Act subsection 178(1).

October 30, 2022
9:26 am
Doug
British Columbia, Canada
Member
Members
Forum Posts: 3934
Member Since:
December 12, 2009
sp_UserOfflineSmall Offline

Norman1 said
No, that's not correct.

Student loans are not eternal. But, they cannot be discharged by bankruptcy within seven years of ceasing to be a student.

Details are in Bankruptcy and Insolvency Act subsection 178(1).  

Thanks, Norman. I believe the U.S. has similar provisions and was vaguely familiar with the idea something similar existed in Canada, but had never looked into it. So, a Canada Student Loan could be discharged in a bankruptcy proceeding, provided the former student had concluded their studies at least seven (7) years after either (i) the start date of their bankruptcy filing or (ii) the effective discharge date of their bankruptcy. (I'm not saying I and II both exist, but just seeking clarification on whether it is I or II.)

Cheers,
Doug

October 30, 2022
11:23 am
Norman1
Member
Members
Forum Posts: 5706
Member Since:
April 6, 2013
sp_UserOfflineSmall Offline

It is neither. Item 178(1)(g) prevents discharge of student loans while the person is a student and for seven years after the person is no longer a student.

October 30, 2022
1:10 pm
HermanH
Member
Members
Forum Posts: 800
Member Since:
April 14, 2021
sp_UserOfflineSmall Offline

Thanks for the info, Norman1.

178 (1) An order of discharge does not release the bankrupt from

(a) any fine, penalty, restitution order or other order similar in nature to a fine, penalty or restitution order, imposed by a court in respect of an offence, or any debt arising out of a recognizance or bail;

(a.1) any award of damages by a court in civil proceedings in respect of

(i) bodily harm intentionally inflicted, or sexual assault, or

(ii) wrongful death resulting therefrom;

(b) any debt or liability for alimony or alimentary pension;

(c) any debt or liability arising under a judicial decision establishing affiliation or respecting support or maintenance, or under an agreement for maintenance and support of a spouse, former spouse, former common-law partner or child living apart from the bankrupt;

(d) any debt or liability arising out of fraud, embezzlement, misappropriation or defalcation while acting in a fiduciary capacity or, in the Province of Quebec, as a trustee or administrator of the property of others;

(e) any debt or liability resulting from obtaining property or services by false pretences or fraudulent misrepresentation, other than a debt or liability that arises from an equity claim;

(f) liability for the dividend that a creditor would have been entitled to receive on any provable claim not disclosed to the trustee, unless the creditor had notice or knowledge of the bankruptcy and failed to take reasonable action to prove his claim;

(g) any debt or obligation in respect of a loan made under the Canada Student Loans Act, the Canada Student Financial Assistance Act or any enactment of a province that provides for loans or guarantees of loans to students where the date of bankruptcy of the bankrupt occurred

(i) before the date on which the bankrupt ceased to be a full- or part-time student, as the case may be, under the applicable Act or enactment, or

(ii) within seven years after the date on which the bankrupt ceased to be a full- or part-time student;

(g.1) any debt or obligation in respect of a loan made under the Apprentice Loans Act where the date of bankruptcy of the bankrupt occurred

(i) before the date on which the bankrupt ceased, under that Act, to be an eligible apprentice within the meaning of that Act, or

(ii) within seven years after the date on which the bankrupt ceased to be an eligible apprentice; or

(h) any debt for interest owed in relation to an amount referred to in any of paragraphs (a) to (g.1).

Please write your comments in the forum.