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Can Filing for Bankruptcy Eliminate 100% of Your Debt?

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A bankruptcy will eliminate most debt. However there are certain debts that survive the completion or “discharge” of a bankruptcy. They include the following:

  • Court fines (e.g. speeding ticket), penalties and restitution orders.
  • Any award of damages by a court for bodily harm intentionally inflicted, sexual assault or wrongful death.
  • Alimony, child support and maintenance.
  • Debts arising from actions such as fraud and embezzlement.
  • Debts arising from obtaining property by false pretenses or fraudulent misrepresentation.
  • Liability for any dividend that a creditor would have been entitled to receive but did not because you failed to disclose the creditor to your Trustee.
  • Student loans in certain circumstances. See below
  • Student Loan Debt & Filing for Bankruptcy

    In summary, a student loan debt survives bankruptcy if it has been less than seven years since you ceased to be a full or part-time student from the date of bankruptcy. This applies to student loans that are granted based on relevant federal or provincial legislation (e.g. a Canada Student Loan).

    If you’ve completed your bankruptcy and the student loan debt survived, you may be eligible to make a court application to have your student loan debt extinguished. In making such an application, you must be out of school for more than 5 years and discharged from your bankruptcy. In addition, you must prove that you have acted in good faith in connection with the loan and that you have or will continue to experience financial difficulty to such an extent that you will be unable to pay the debt. There is no guarantee that such an application will be successful, the court will consider the merits of each case on an individual basis.

    Additional Resources

    For more information on debts that survive a bankruptcy, please contact me directly or consult our Bankruptcy FAQ.

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