ADDENDUM
In my previous post, I made reference to a part-time night school course at a local college or university. I clearly stated that this course was not financed by any loans but by a student's own money. I further stated that by taking this course, it would reset the 7 year period for including defaulted and unpaid student loans in a bankruptcy filing.
I am now going to amend my comments which should have been made in my original post.
Paragraph 178(1)(g) of the Bankruptcy and Insolvency Act states that the following debts are NOT discharged when you declare bankruptcy in Canada:
(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.
In summary, government guaranteed student loans are only automatically discharged if you have "ceased to be a full time or part-time student" for more than seven years prior to when you declare bankruptcy.
What does "ceased to be a full time or part-time student" mean? In general, it means that once you leave school, you have ceased to be a student.
A strict reading of the legislation indicates that it is ceasing to be a student that is the critical date.
However, to complicate this discussion, there was a court case in 2005 that addressed this issue ( Re Ledoux 2005, SKQB 75, 8 C.B.R. (5th) 225 ). In this case, the bankrupt left school in 1989 ( her education was funded in part by Canada Student loans). She then returned to school between 1992 and 2000 but did not receive any student loans to return to school. She then went bankrupt in 2004.
The Bankruptcy Registrar ( the judge ) in this case decided that, for the purpose of the student loans, she ceased to be a student in 1989. That was the last year that she was a student for which she received student loans. So, in her case, her student loans were discharged in the bankruptcy.
This case indicates that once you cease to be a student funded by government guaranteed student loans, the seven year period begins. If you return to school but don't get any further student loans, the seven year period does not restart.
Obviously, this is good news for any former students who return to school, and pay for it without government guaranteed student loans.
But first, a word of caution. This case is a case from Saskatchewan. Decisions of the Saskatchewan court are not legally binding in any other province or territory. The courts will typically consider decisions of other courts in other jurisdictions, but they are not legally bound by them.
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Educating one Consumer at a time