Dealing with a Student Loan: Debt Consolidation and Other Alternatives

For a number of people having difficulties paying off their student loans, bankruptcy might seem the only solution for their overwhelming money problems. But is it, really? Or, could student loan debt consolidation, for example, be a better way for dealing with their debts?

The fact is that in the past few years the level of government funding for post-secondary education in Canada has decreased relative to the costs of that education, and as a result the level of student loan debt held by students has increased. Students graduate, but with the weak Canadian economy well paying jobs are hard to find, and students are left with student loan debts they can't pay. What can they do? How should they deal with their student loans?

Alternatives: Student loan debt consolidation & Consumer Proposal

It is worth noting that when it comes to dealing with student loans, bankruptcy is not always inescapable. You have a few options.

First, you could talk to the Canadian and provincial student loans lender (the bank, the government, or the collection agency), and try to work out payment arrangements.

If that does not work, consider student loan debt consolidation as a debt management solution for your situation.

If student loan debt consolidation is not possible, it may be possible to service your debts by filing a consumer proposal. This strategy is particularly successful if you are working and have the ability to pay something, but not the full amount, and only need more time to pay off all of your debts.

Consumer proposals can only be filed by a licensed bankruptcy trustee. Each trustee on our list of bankruptcy trustees offers a free consultation, and can help you assess your specific situation and the correct strategy for dealing with your student loans.

Canada Student Loans in Bankruptcy

Your last resource for dealing with student loans - in case neither consumer proposal nor student loan debt consolidation, nor anything else works for you - is bankruptcy. However, Canadian student loans in bankruptcy are only automatically discharged if they are more than 7 years old.

These rules are changing; for up to date information on the rules for student loans in a bankruptcy in Canada, please refer to the Canada Student Loans Bankruptcy web site.

Or, for immediate help, please contact a trustee today.