Ontario Civil

Bankruptcy and Insolvency

Discharge of bankrupt

Conditional discharge

Student loan indebtedness discharged by assignment in bankruptcy

Applicant obtained student loans for her first course of study in connection with Bachelor of Science program. She obtained loan money between August 1996 and April 2001 and graduated in October 2004. In her second course of study, applicant attended college between 2006 and 2007, but did not obtain student loans. Applicant left program in April 2007. Applicant filed assignment in bankruptcy on December 3, 2011. By virtue of s. 178(1)(g)(ii) of Bankruptcy and Insolvency Act (“BIA”), some student loan debt survives bankruptcy in certain circumstances. Student loan debt is not discharged by bankruptcy if bankruptcy occurred within seven years after person ceased being student. Applicant brought application seeking declaration that she ceased to be student with respect to her student loans in October 2004, and declaration that those student loans were discharged by virtue of applicant’s assignment in bankruptcy. Application granted. Interpretation of s. 178(1)(g)(ii) must be guided by overall purpose of BIA, which was namely rehabilitating and reintegrating individuals to allow for future participation in Canadian economy. Permitting bankrupt to discharge her debts after seven years from date of program to which student loan was connected goes some distance in promoting intent and purpose of BIA, that is to promote rehabilitation of debtors, providing them with fresh start while discouraging any abuse of bankruptcy system. For purposes of applicant’s student loans, she ceased to be student in October 2004. Therefore, seven-year delay requirement had been met. Accordingly, applicant’s indebtedness for student loans obtained prior to October 1, 2004 was discharged by her assignment in bankruptcy.

St. Dennis v. Ontario (Ministry of Training, Colleges & Universities) (2017), 2017 CarswellOnt 6316, 2017 ONSC 2417, Patricia C. Hennessy J. (Ont. S.C.J.).

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