Bankruptcy and Acknowledgement of Loan

As per Johnny's comments, the date that you made an Assignment in Bankruptcy, becomes the date that you acknowledge your student debt. Your Trustee then has 5 days to contact each of your creditors and inform them that you have made an Assignment in Bankruptcy on a particular date. This date not only sets the clock for a new Limitation period, it also establishes a Stay of Proceedings for any creditor to commence a legal action or to continue with collection activity.

You stated that you and your wife filed for bankruptcy in 2005. You further stated that your student debt was only 6 years in default and as the Bankruptcy and Insolvency Act read at that time, your student loan would have had to be 10 years or more in default before it could be discharged in a bankruptcy. Needless to say, it survived the bankruptcy.

When you were discharged on February 28, 2006, this does not constitute an acknowledgement of the debt. Further, when the Trustee was discharged in November, 2007, this too does not constitute an acknowledgment of the debt. And so, your new Limitation period will start from the date of the Assignment, suspended for the period during which you were in bankruptcy and then continues from the date of Discharge.

For lending institutions that issue student loans and for debtors who file for bankruptcy, but which their student loans survive the bankruptcy, it is customary for the financial institutions ( I.e. RBC ) to wait until the Trustee has been discharged before they commence either legal proceedings or collection activity. Now you know when your new Limitation period begins and depending on your jurisdiction of residence, when it will end.

If the Statute of Limitations in your Province /Territory of residence is 6 years, then this debt is Statute-Barred. This means that while the debt still exists, RBC cannot commence a legal action in an attempt to obtain a court judgment.

Payment by a Trustee of an income tax refund to your creditors after you have received your Discharge does constitute an "acknowledgment" pursuant to Paragraph 16.1(4)(d) of the Canada Student Financial Assistance Act and as such, resets a new limitation period providing your student loan survives the bankruptcy.

If, on the other hand, your student loan is extinguished in the bankruptcy, then any "acknowledgment" made by a Trustee becomes irrelevant.

Also keep in mind, for those student loans that survive a bankruptcy, a new Limitation period will be "triggered" when the Trustee files his final report with the Registrar of the Office of the Superintendent of Bankruptcy. This report is called the "Certificate of Compliance and Deemed Discharge of Trustee". It can be issued anywhere from 1 to 3 years after the bankrupt has received their Discharge depending on the complexity of the Estate, assets to be liquidated and income tax returns to be filed and assessed. For example, if a debtor makes an Assignment in Bankruptcy and has not filed income tax returns for the 3 years prior to the Assignment, the Trustee is required to file those income tax returns together with an income tax return for the period(s) that the debtor was in Bankruptcy. Only a small unit at the Canada Revenue Agency ( CRA ) deal with income tax returns filed by a Trustee in Bankruptcy and their assessment tends to extend well beyond the normal assessment of income tax returns.