Ontario Civil

Bankruptcy and Insolvency

Discharge of bankrupt

Conditional discharge

Bankrupt did not establish she would continue to experience financial difficulty

Release from debt. Bankrupt made assignment into bankruptcy and received automatic discharge, but her student loans were not released. Bankrupt ended her studies over seven years ago after three unsuccessful attempts to complete dental hygienist program. Bankrupt made some payments on student loans over years. Bankrupt was 40 years old, had no children and was in common-law relationship. Bankrupt worked part-time as pharmacy assistant and earned $2,200 after-tax monthly income and reported her partner did not work due to series of deaths in his family. Bankrupt claimed she covered all monthly expenses and had $857 monthly deficit. Bankrupt brought motion for order releasing her from student loan debts pursuant to s. 178(1.1) of Bankruptcy and Insolvency Act. Motion dismissed. Bankrupt used student loans for intended purpose but was unable to complete program so could not be employed as dental hygienist. Bankrupt made some voluntary payments, bankruptcy occurred six years ago and bankrupt lived modest lifestyle. Good faith requirement was met. Bankrupt was in financial difficulty that presently made it impossible for her to pay her student loans, but s. 178(1.1)(b) required this situation continue, and bankrupt did not meet burden of proof. Bankrupt provided limited information on her hours of work, why she only worked part-time, and did not provide hers or her partners tax returns, information about their assets or more details about her partner’s circumstances and purported inability to work. Bankrupt’s reported $600 monthly expenditure on entertainment, alcohol and tobacco also raised questions. Bankrupt did not establish she would continue to experience financial difficulty to such extent that she would be unable to retire remaining student loans.

Jones v. H.M.Q. (Canada) and H.M.Q. (Ontario) (2018), 2018 CarswellOnt 17023, 2018 ONSC 6170, A.D. Grace J. (Ont. S.C.J.).

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