Declaring a personal bankruptcy or submitting a consumer proposal can cover your unsecured debts. There are, however, certain unsecured debts that are not covered by a bankruptcy or a proposal and they include the following:

  • Child support
  • Alimony
  • Fines and penalties imposed by a court
  • Traffic tickets
  • Fraudulent debts
  • Indemnifications for damages and prejudice including corporal damages, death caused by negligence or damages for sexual assault.

Student loans may be covered by bankruptcy or a proposal if the individual ceased to be a student more than 7 years ago. A bankruptcy or a consumer proposal releases a person from all unsecured debts including credit cards, banking loans and debts that he may have with Canada Revenue Agency.

Secured debts such as mortgages and car loans are also not covered in bankruptcies unless a person relinquishes ownership of these assets.

Student Loans That Are Less Than 7 Years Old

If you declare bankruptcy or make a proposal within 7 years after leaving school you must pay off your student loan. At the same time, however, you are provided with a certain level of protection and will be given a grace period during which the authorities in charge of the student loan can not initiate a legal action against you. You’ll be able to pay off your student loan in a much more organized and manageable manner, which will provide you with a better future cash flow.