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Student Loan Debt and Bankruptcy: Expert Advice from D. & A. MacLeod Company Ltd.

Dealing with student loan debt can be overwhelming, especially when it's accompanied by financial difficulties that might prompt individuals to consider filing for personal bankruptcy. At D. & A. MacLeod Company Ltd., we recognize the intricacies involved in managing student loan debt and bankruptcy, and we're here to provide you with guidance and assistance.


In today’s blog post, we'll delve into the intersection of student loan debt and bankruptcy and share valuable insights and advice to help you navigate this challenging situation.

students holding a sign that says DEBT HELP


Understanding Student Loan Debt and Bankruptcy

After graduation, many individuals are burdened with student loan debt, which is a significant financial obligation. In Canada, student loans are generally not dischargeable in bankruptcy proceedings, but there are exceptions and avenues to explore.


There is an exception known as the seven-year rule for student loan debts. If it has been seven years since you were last enrolled as a full-time or part-time student, your federal and provincial student loans may be eligible for discharge in bankruptcy. This rule aims to provide relief for individuals who have been burdened by student loan debt for an extended period.


Moreover, a hardship provision allows for the discharge of student loans before the seven-year mark under certain circumstances. To qualify, you must demonstrate to the court that repaying your student loans would cause "undue hardship." It is a complex legal concept that requires expert guidance from a Licensed Insolvency Trustee (LIT).


Exploring Alternatives to Bankruptcy

Before considering bankruptcy, it is crucial to explore all available alternatives. At D. & A. MacLeod Company Ltd., we provide customized debt solutions that cater to your specific needs. Here are some alternatives you can consider:


  • Student Loan Repayment Programs Government-backed repayment programs, based on income and family size, can ease student loan debt without bankruptcy.

  • Debt Consolidation Consolidating your debts, including student loans, into a single, manageable payment can reduce financial strain and simplify your repayment process.

  • Consumer Proposal A Consumer Proposal is a process of negotiating a repayment plan with your creditors, which might include your student loan provider, to settle your debts for a portion of the total amount owed. This approach permits you to avoid bankruptcy while still achieving debt relief.

  • Seeking Professional Help If you are struggling with debt and financial difficulties, it may be helpful to seek the support of a licensed insolvency trustee like the team at D. & A. MacLeod Company Ltd. Our professionals are highly trained to evaluate your financial situation and provide expert guidance on the best course of action.


Remember, you're not alone. Many Canadians struggle with student loan debt. D. & A. MacLeod Company Ltd. is here to help you navigate the complexities and find a path towards financial stability. Whether you're considering bankruptcy or exploring alternative options, our team of experienced professionals is here to provide the guidance and support you need.

Contact us today for a free consultation and take the first step towards a brighter financial future.




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