Posted under bankruptcy
Last week, the Federal Government brought some long awaited changes to the Bankruptcy and Insolvency Act. These changes dealt specifically with student loans and Registered Retirement Savings Plans (RRSP).
STUDENT LOANS
The new rules state that if the student loans are seven years old by the time someone files a consumer proposal or personal bankruptcy, then they are now dischargeable. That is, they will be eliminated after the consumer proposal or personal bankruptcy is completed. The age of the student loan begins when the student ceases to be a full or part-time student (referred to as the “end of study” date) and ends on the date that a consumer proposal or personal bankruptcy is filed. This is a change from the old rules which defined the dischargeable age of a student loan as 10 years.
To confirm the end of study date, here are the numbers:
Canada Student Loans: 1-888-815-4514
Ontario Student Loans: 1-807-343-7260
Further, if someone has completed a consumer proposal or a personal bankruptcy and the student loans are greater than 5 years old, a court application can be made to now have them discharged. After some court motions are made under this new law, there will likely be precedents set on the requirements to have the loans discharges. For this section of the law, we recommend that a lawyer be consulted.
REGISTERED RETIREMENT SAVINGS PLAN (RRSP)
In the past, some RRSP investments were cashed by the trustee in a personal bankruptcy. Pursuant to the new laws, all types of RRSPs are protected from the creditors in a bankruptcy, the only exception, is being those contributions made within the last 12 months prior to filing for personal bankruptcy.
If you would like to discuss these new rules or your situation, please call us at 519-747-0660 or e-mail us.
