OSAP Loans over 10 years old

Question: I went to college more than 10 years ago and OSAP has been after me ever since to repay my student loans. Although I would have liked to repay these loans I found it difficult to find good employment and now I am on disability and still cannot afford to repay my student debt. I was told there was a way to clear this debt off after 10 years if I cannot afford to pay it back, is this true?

Answer: Yes, when student loan debt is as old as yours there is a way to clear off the debt, assuming you can’t afford to repay it.  You have two possible alternatives: personal bankruptcy and a consumer proposal.

Automatic Discharge of Student Loans

Let’s talk a bit first about student loan debts.  Student loans can be automatically discharged in a bankruptcy if they are more than 7 years old. The definition of 7 years old is tricky however.  It means that you must have stopped being a student more than 7 years ago.  In other words it is not based on the date your borrowed the money but on the date your stopped being a student.  In your case, it appears that you have no longer been a student for more than 10 years so your student loan debt qualifies for an automatic discharge.

Student Loans Debt Settlement Options

So now back to your two options. Because you qualify for an automatic discharge of your student loans, bankruptcy may be your best option. If you are struggling making payments and not working regularly you may not have sufficient income to support a consumer proposal.  In that case, bankruptcy may work better for you.

More information on student loans and bankruptcy can be found in our article on student loans and bankruptcy and at the student loan bankruptcy blog.

To file bankruptcy in Canada you need the services of a federally licensed bankruptcy trustee. Contact a bankruptcy trustee to arrange for a free, no-obligation consultation today to talk about your student debt.

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