Debt Relief Experts
If you’re overwhelmed by student loan debt, we’re here to guide you through real solutions that can reduce or even eliminate what you owe. At Hoyes Michalos, our Licensed Insolvency Trustees have helped thousands of Canadians find relief from government and private student loans. Whether you’re dealing with recent student debt or older loans, there’s a path to regaining control of your finances.
Table of Contents
Student Loan Debt Relief at a Glance
Below is a brief overview of the main options and how they can help:
- Government Repayment Assistance: Government programs like the Repayment Assistance Plan (RAP) through the National Student Loans Service Centre can temporarily reduce or suspend your monthly student loan payments. This program can help individuals who have a short-term cash flow challenge but you will still be required to pay off your student debt.
- Bankruptcy: A legal process that can discharge your student debts after a 7-year waiting period.
- Consumer Proposal: A legal debt settlement arrangement that can include student loans if you have been out of school for seven years.
We explore more about the student loan forgiveness available through a bankruptcy or consumer proposal below, including the special rules around the elimination of student debt through a Licensed Insolvency Trustee.
Clearing Student Loans Through Bankruptcy
Bankruptcy is a legal process that helps people who cannot pay their debts. However, student loans work differently than most other debts in bankruptcy.
Are Student Loans Discharged in a Bankruptcy?
In Canada, student loans can be discharged through bankruptcy if:
- It has been seven or more years since you were last a student
- The loans are from government student loan programs (federal or provincial)
The Seven Year Rule or Waiting Period
Under Section 178 (1) of the Bankruptcy & Insolvency Act:
- The 7-year period starts when you’re no longer a student, not from the loan’s opening date. Canada Student Loans can confirm your official end-of-study date.
- Returning to school in part- or full-time capacity may reset the 7-year period.
The Process
To get your student loans discharged in a Canadian bankruptcy you must:
- File for bankruptcy with a Licensed Insolvency Trustee
- Provide documentation about when you ceased being a student
- Complete required bankruptcy duties and counselling sessions
Private Student Loans
Private student loans are not subject to the seven-year waiting period. If your student loan was issued by a bank or another private lender (not guaranteed by the government)—for example, a student line of credit or student credit card—then it’s treated like any other unsecured consumer debt. This means it can be automatically discharged under the Bankruptcy and Insolvency Act (BIA), regardless of how long ago you borrowed the money.
Hardship Discharge (5-Year Rule)
A hardship discharge (5-Year Rule) is a court-ordered exception that can shorten the standard seven-year waiting period to five if you demonstrate severe financial hardship. You must apply to the court and show that you acted in good faith and intended to repay your student loans but are, and will continue to, experience severe financial difficulty if your loans remain undischarged. You require the assistance of a lawyer to apply for this early discharge.
Stay of Proceedings
Filing personal bankruptcy or a consumer proposal creates a stay of proceedings that stops creditors from collecting debts, including student loans.
- Eligible student loans and other unsecured debts are discharged after completion.
- Student loans less than 7 years old aren’t discharged but collection is suspended during bankruptcy or proposal. You can still make voluntary payments on student loans during a proposal, and if your lender files a claim, they’ll receive their share of payments, reducing your remaining student debt.
Consumer Proposal and Student Loan Debt
Can Student Loans Be Included in a Consumer Proposal?
It is possible to include student loan debt in a consumer proposal as long as you meet the seven-year rule.
A consumer proposal is an option to negotiate repayment terms with your creditors through a Licensed Insolvency Trustee, for much less than what you owe today.
The Process
- Propose a Reduced Payment: You offer to pay back a portion of your debts over a set period (up to five years).
- Stay of Proceedings: Once filed, creditors—including student loan lenders—must stop collection calls, wage garnishments, and lawsuits.
- Legally Binding: If a majority of your creditors accept your proposal, it becomes binding for all.
Can I Get a Student Loan During or After a Consumer Proposal or Bankruptcy?
Consumer proposals or bankruptcy present challenges, but it’s still possible to qualify for a new government student loan even after filing. Each provincial student loan program has its own regulations, but they generally scrutinize your application more closely.
For example, the Ontario Student Assistance Program requires students to provide documentation of their consumer proposal and proof that student loan funds won’t be paid to creditors. In British Columbia, you’re ineligible for funding until 8-10 years after leaving post-secondary studies.
We answer more questions on our student debt help FAQ page.
Student Debt Consolidation
Student debt consolidation is not common in Canada for good reasons:
- While a consolidation loan would pay off your existing student loans, it creates new debt that loses student loan status.
- Government student loans typically offer lower interest rates than private consolidation loans.
- Converting to a private loan also eliminates valuable tax benefits (the non-refundable tax credit for student loan interest) and disqualifies you from government repayment assistance programs.
- Canadian banks rarely approve consolidation loans specifically for student debt.
If you cannot afford your low interest student loan payments, you likely cannot afford a consolidation loan. A consumer proposal is a more practical option to consolidate various debts, including eligible student loans, into a single monthly payment.
Eliminate Student Loan Debt
Struggling With Student Debt? We Can Help.
You don’t have to face overwhelming student loan debt alone. Whether you need immediate relief from collection calls or want to reduce your payments to a manageable level, Hoyes Michalos can guide you to the best solution—so you can move forward without the burden of past debts.
- ✅ Experience & Expertise: More than 25 years helping Canadians overcome student debt.
- ✅ Personalize Approach: We’ll recommend the best option – repayment assistance, bankruptcy, or a consumer proposal – based on your unique situation
- ✅ Licensed Insolvency Trustees: Regulated professionals, ensuring every solution meets legal requirements and protects you fully.
- ✅ Free Consultations: Discuss all your options before you decide, at no cost.
Ready to eliminate your student loan debt?
Hoyes Michalos & Associates provides student debt relief services in the following locations:
Other service areas
We offer the convenience of phone and video-conferencing services in the following additional locations:
