If you declare bankruptcy


Declaring bankruptcy when you have student loans can have serious long-term effects on your financial and educational future.

What is the impact of bankruptcy on my student loans?

  • Immediate repayment required - If you declare bankruptcy, your Canada and B.C. student loans automatically go into repayment status and you must start paying back your loans unless you are pursuing the same course of studies.
  • Long-term ineligibility - If you declare bankruptcy, you may not be eligible for any more StudentAid BC funding until 10 years (or 8 years under financial hardship conditions) after you have left post-secondary studies.

How do I apply for rehabilitation after bankruptcy?

You must complete two separate rehabilitation processes after declaring bankruptcy: one for Canada student loans and the other for B.C. student loans.

For information about Canada student loan bankruptcy and rehabilitation policies, visit the National Student Loans Service Centre .

You are encouraged to contact StudentAid BC to ensure that you are aware of all documents you need to submit for a complete application.

If you declare bankruptcy while attending school, you can ask for conditional rehabilitation if you want to continue studying full-time in the same study program, and you want to apply for more B.C. student loan funding or to retain your interest-free status .

If you change your program of study, you will have to wait until you have been out of school for 10 years (or 8 years under financial hardship conditions) before you will be eligible for rehabilitation.

Instructions

  1. 1 Complete the application form.
  2. 2 Include all of these details and supporting documents:
    • A cover letter detailing:
      • your reasons for filing bankruptcy
      • your current program of study
      • the length of time remaining in the current program
      • your career plans for using this education.
    • A current official transcript from your school confirming your program of study and your academic progress to date.
    • A recent credit report (dated within the past two months) from Equifax or an equivalent credit-reporting agency.
    • Letters (at least one) from responsible third parties that confirm the reasons for your bankruptcy as well as your current plans, career goals and focus for the future ("third parties" can be a counsellor, doctor, religious adviser, relative or family friend).
  3. 3 Send your completed application and all supporting documents to the attention of the Case Review Unit, StudentAid BC .

If you are approved for conditional rehabilitation by the Case Review Unit and then you change your program of study, withdraw from school or enter loan repayment, the conditional rehabilitation will be cancelled.

If you declare bankruptcy for medical reasons , you must provide medical documentation indicating the dates of your condition, the length of time a doctor and/or specialist has been involved with your situation, and how the medical condition contributed to your bankruptcy. This documentation must also confirm that you are now able to participate in full-time studies and then enter the workforce.

Loan rehabilitation due to bankruptcy appeal form

PDF - 637.54 KB

If you declared bankruptcy on or after July 7, 2008, (or declared bankruptcy on or before this date and have not been discharged from that process) and you have been out of school for at least 10 years, you must ask for regular rehabilitation of eligibility to be considered for any further B.C. student assistance.

You will need a clearance letter from the Canada student loans program confirming your Canada student loan rehabilitation. A copy of this letter is required when applying for regular B.C. student loan rehabilitation.

You must be rehabilitated for Canada student loans before you can apply for regular rehabilitation of B.C. student loans.

Instructions

  1. 1 Complete the application form.
  2. 2 Include all of these details and supporting documents:
    • A cover letter detailing:
      • your exceptional circumstances for filing bankruptcy
      • specific actions you have taken to rehabilitate yourself financially since the bankruptcy
      • work, studies, volunteering and other activities you have engaged in since declaring bankruptcy
      • your plans, career goals and the desired outcomes of your study program
      • any other information that might help the case review unit's review of your request.
    • Documented proof of all claims you have made in your cover letter, such as:
      • school transcripts confirming your academic standings
      • employment confirmation letters or copies of T4 slips
      • other income information, if you were not working
      • medical records, doctors' letters etc., if applicable (see below).
    • Not be in default on your Canada student loan.
    • A recent credit report (dated within the past two months) from Equifax or an equivalent credit-reporting agency.
    • A copy of the initial bankruptcy papers you filed in order to confirm the date of bankruptcy, details of creditors and amounts involved (sometimes referred to as "statement of affairs" or "initial assignment into bankruptcy").
    • Letters (at least one) from responsible third parties that confirm the reasons for your bankruptcy as well as your current plans, goals and focus for the future ("third parties" can be a counsellor, doctor, religious adviser, relative or family friend).
  3. 3 Send your completed application and all supporting documents to the attention of the Case Review Unit, StudentAid BC .

If you declared bankruptcy for medical reasons , you must provide medical documentation indicating the dates of your condition, the length of time a doctor and/or specialist has been involved with your situation, and how the medical condition contributed to your bankruptcy. This documentation must also confirm that you are now able to participate in full-time studies and then enter the workforce.

Loan rehabilitation due to bankruptcy appeal form

PDF - 637.54 KB

What is the rehabilitation after bankruptcy appeal process?

After you submit your application, StudentAid BC will determine:

  • if there are exceptional circumstances that led to your bankruptcy and that warrant waiving standard StudentAid BC policy
  • that you have made a reasonable effort to rehabilitate yourself financially since bankruptcy (unless you are in school and applying for conditional rehabilitation)
  • that you have clear goals and a focus for your career
  • that your academic standing in your present or previous program of study is successful and warrants consideration for further funding to continue your education.

The case review unit meets monthly. Once the committee has considered your request for rehabilitation after bankruptcy, a letter will be sent to you confirming the decision.

The case review unit's recommendation on rehabilitation after bankruptcy are final. However, if you are denied rehabilitation and you have more supporting documentation that was not provided in the initial application that you think may change the recommendation of the committee, you can submit a new rehabilitation after bankruptcy application with all previous and added supporting documents and details of your bankruptcy circumstances for the committee to consider at a future date.