⚖️ Fresh start
How long before bankruptcy wipes out student loans? Plus deportation for the Humboldt Broncos driver.
Dylan Gibbs
December 15, 2023
TODAY’S DOCKET
Supreme Court hearing case about relief from student loan debt
Driver convicted of Humboldt Broncos collision loses immigration challenge
Feds consider holding off on planned expansion of assisted dying
BANKRUPTCY
SCC to clear up whether certain student loans discharged by bankruptcy
How long do you need to wait before you can wipe out your crushing student debt by declaring bankruptcy? The Bankruptcy and Insolvency Act suggests a simple answer — seven years. But Canadian courts have taken varying approaches to a tricky edge case. The Supreme Court granted leave to appeal yesterday to sort out the conflicting lower court decisions.
The lifelong learner issue: According to the Act, bankruptcy can’t extinguish a student loan if the bankruptcy occurs within “seven years after the date the bankrupt ceased to be a [student]”. The issue is for people who go to school more than once. If someone finances one degree with student loans but funds a second degree themselves, when does the seven-year clock start to run?
Under appeal: Ms. Piekut financed two degrees. She finished her bachelor’s degree in 1995 and her master’s degree in 2003. Her student loans would have been eligible for a bankruptcy discharge in 2010, but Ms. Piekut went back to school. She completed a second master’s degree from 2008 to 2009 — this time funding it herself.
Ms. Piekut entered bankruptcy in 2013 — if her third degree restarted the clock, she’s stuck paying the $28,000 or so that remains outstanding on her student loans.
Most courts would have given Ms. Piekut a break — the date that matters is the date the bankrupt ceased being a student in the specific program they funded using student loans. That’s true in Saskatchewan, Ontario, New Brunswick, Nova Scotia, and Newfoundland and Labrador.
But it’s a harsher world in Quebec. And in British Columbia, where Ms. Piekut’s case originated. There, the date that matters is the very last date the bankrupt ceased being a student.
Big picture: The Quebec and B.C. decisions raise the concern of opportunistic bankruptcies. Seven years is supposed to give time to capitalize on your education and pay back the public — are you capitalizing if you go back to school instead of working?
On the other hand, bankruptcy is meant to give debtors a clean slate so they can contribute to the economy. Plus, after each of the degrees Ms. Piekut funded with student aid, there were at least seven years during which she wasn’t enrolled in school — is it fair to penalize her for her third degree?
What do you think the answer should be? |
HEARSAY ROUNDUP
Canadiana
🧑⚖️ The driver responsible for the 2018 Humboldt Broncos is one step closer to being deported to India. He asked the Federal Court to overturn the CBSA decisions that recommended his removal from Canada, but the Court denied his application yesterday.
🚛 Is the class action lawsuit over the Freedom Convoy a strategic lawsuit against public participation? The parties made arguments in an anti-SLAPP motion and the judge’s decision is under reserve.
🧑⚕️ The federal government is considering holding off on expanding assisted dying to mental health conditions — a change that’s supposed to happen in March. The House of Commons recently voted down a bill that would have prevented the expansion, but now Justice Minister Arif Virani says the government is still giving it some thought.
SHARE HEARSAY
If you liked something in this newsletter, consider sharing Hearsay with your network. You’ll be rewarded! You can find your custom referral link in the email version of Hearsay.
Reply