BC Court confirms single date approach to discharging Student Loans through a consumer proposal or bankruptcy.
A recent decision by the BC Supreme Court confirmed that BC will continue to follow the single date approach when considering whether or not a Student Loan is dischargeable through either a consumer proposal or a bankruptcy.
In the recent decision of Re: Piekut (2021 BCSC 1883) the Court declined to change the single date approach to a multiple date approach when considering if Student Loans are discharged in ether a consumer proposal or bankruptcy and continued to follow the current jurisprudence that was established in 2015 in the BC Decision of Re: Mallory (2015 BCSC 5).
The current legislation provides that if a student loan is more than seven years old at the date of a bankrupt’s filing, or the filing of a Consumer Proposal, it is dischargeable as a debt under the Bankruptcy and Insolvency Act. If it isn’t greater than seven years old then the debt is not dischargeable.
It may be discharged if the student makes a “hardship” application once it is more than five years post-study but less than seven years of the filing of the bankruptcy or consumer proposal (more on that later in a subsequent paper).
We understand that Student Loans considers the End of Study date as the date when an individual ceased or ceases to be a student. This date doesn’t mean the last day you attended school. It is the date that the government considers to be the last date of the program you were last enrolled in. It also includes both full-time and part time attendance.
The applicant raised the issue of whether the BC Court should continue to use the “single date” approach as decided in Mallory or “multiple date” method of determining whether a student loan is discharged under s. 178(2) of the BIA which has been used in other jurisdictions.
Does a student who is in-and-out of school, with or without student loans for each (or any) session, reset the clock each time they enroll, or does the clock stop each time they cease study? In BC the answer is the clock resets as decided in Mallory and confirmed in Peikut. The end result is that the student loan survived the proposal and was not discharged under the BIA.
Different jurisdictions have taken a “multiple date” approach. However, in BC that has been rejected.
We understand the decision is being appealed.
If you have Student Loan debt that is unmanageable, contact us today. We offer a free no-obligation consultation where we will look at all your debts with you and help you decide if a bankruptcy or consumer proposal makes sense to deal with your student debt.
A virtual meeting is available via Zoom or Microsoft Teams. Or we can chat on the phone or by email. If you would like an in-person consultation, we can arrange that as well. We have offices in Vancouver and Surrey.
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