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 Topic: New Bankruptcy Rules came into effect July 7 2008
Posted: 10/July/2008 at 4:14pm |
Student Loans
The waiting period before which a student loan may be discharged is reduced from 10 years to 7 years. The period before which an application may be made to court to request a discharge on the basis of hardship is reduced from 10 years to 5 years.
The new time frame of 7 years will apply to all those who file for bankruptcy after the coming into force date and to undischarged bankrupts, i.e., student-loan borrowers who have become bankrupt but who have not yet been discharged.
Section 178(1.1) (the "hardship provision") will be available to all bankrupts, including those who have been discharged prior to the coming into force of the provision.
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Chapter 47 reduces the discharge prohibition period from 10 years to 7 years. Furthermore, the court may, on the application of the bankrupt, discharge the debt five years after the completion of studies, if the court is satisfied that the bankrupt has acted in good faith and will continue to
experience such financial difficulty that he or she will be unable to repay the debt.
Bill C-12 clarifies that when the new seven-year discharge period comes into force, it will not only apply to individuals who file for bankruptcy after that date, but also to those who have already filed for bankruptcy and have not been discharged. (The five-year waiting period will apply to all bankrupts, past, present and future.(47))
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From what I read here, if you have already been bankrupt and have been discharged from your bankruptcy, then you can apply under the 5 year hardship rule.
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administrator
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Posted: 10/July/2008 at 4:18pm |
As a followup, it seems that the actual regulations that will be used are still being worked on. From what I understand the DATE OF BANKRUPTCY must be at least 7 years after the finish of school to qualify for the discharge of the loans. If it has been 5 years then the 178.1.1 hardship application can be made.
There are procedures that will be followed to determine whether hardship exists... but I dont know what these are... as the regulations are still to be written.
If you have already gone bankrupt but your loans were not discharged, and its been five years since you were out of school, apparently you can apply under hardship to have the loans discharged.
If any of this is incorrect, please post or correct here!
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Madmorrigan
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Posted: 19/July/2008 at 12:39pm |
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Can someone explain the 5 yr hardship rule in plain English?
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SolveStudentDebt
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Posted: 19/July/2008 at 2:37pm |
If you are experiencing hardship whereas you can demonstrate that you will not be able to repay, you are post-bankrupt, and 5 years has passed since you were in studies (FT or PT). You will have to demonstrate that you could not pay during the 5-year period.
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Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting. solvestudentdebt.com
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Posted: 19/July/2008 at 7:08pm |
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If you go bankrupt, and its been 5 years since you finished school, and you can prove hardship, then the loan can be discharged. If you have already been bankrupt, or are in bankruptcy right now, and have been out of school 5 years, you can apply for the hardship under your old or current bankruptcy.
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Madmorrigan
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Posted: 21/July/2008 at 10:12am |
 administrator wrote:
If you go bankrupt, and its been 5 years since you finished school, and you can prove hardship, then the loan can be discharged. If you have already been bankrupt, or are in bankruptcy right now, and have been out of school 5 years, you can apply for the hardship under your old or current bankruptcy. |
So...I've been out of school since 1998. I declared bankruptcy in 2002. I was discharged in 2006. Does this mean that if I can prove hardship NOW or THEN? Now, decent job, decent wage, still can't afford squat but making headway. I'm 'hard-up' for cash, but I'm definitely not under what would be considered 'hardship'. Back then...well, let's just say I went on the "abject poverty diet" and ended up losing 105 lbs (not kidding--I was so po' I could barely eat). Can I prove I was under hardship back then? Uh, yeah...def.
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Posted: 21/July/2008 at 12:26pm |
I put a call into the Superintendant of Bankruptcy Office two weeks ago to get clarification.... still no reply...
Anyone else able to answer this?
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icemaiden129
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Posted: 22/July/2008 at 7:03am |
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i believe it means currently since you or they are applying for hardship now but i'm not 100 percent positive.
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hunter
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Posted: 30/July/2008 at 6:07am |
I contacted several lawyers and to make a hardship claim the cost is $ 1,500 - $ 2,000 and there is no guarantee that it will be accepted. I am told that there is a government representative at the court.
My trustee told me to file for bankruptcy again, but I am not willing to do that. 
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SolveStudentDebt
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Posted: 30/July/2008 at 6:29am |
This is part of what I have been trying to warn people about. Once the ruling down to 7 years (5 in hardship cases) was put in full force, one particular bankruptcy group across Canada has been sending letters to past student loan borrowers who have approached them at one time or another in all provinces. These letters are apparently advising people that it would be good to go bankrupt! I received a call from someone not long ago that mentioned the trustee named Deloitte and Touche regarding these letters. I suspect that the leash that the bankruptcy sector has been forced to wear since 1998 has been given a little more slack in the rope, so it can venture further out into the yard.
The powers that be recognized bankruptcy as a direct threat to the student loan recovery sector, so in their viewpoint it was necessary to leash them rather than have them running loose to do what they wanted. I am unsure if it was a disciplnary action, or a preemptive strategy in respect of mainting recoveries of student loan accounts. The discharge of student debt does not come any easier just because the 10 down to 7 year rule came into force. It just means that you can "apply" to have the loans discharged sooner than 10 years. For some reason, people interpret that discharge is guaranteed.
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Solve Student Debt specializes in solutions for students and graduates in student loan default, and those at risk of defaulting. solvestudentdebt.com
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New Bankruptcy Rules came into effect July 7 2008