Paying Off OSAP: Student Loans, Consumer Proposals and You
When you’ve studied tirelessly and spent years working towards that well-earned degree or diploma, the last thing you want to think about once you graduate is the debt that accumulated in your quest to obtain it. Unfortunately, student loans are unique in their formation, particularly OSAP loans, and so today we attempt to clear the waters. Today we’re talking student loans, consumer proposals, and how you can finally get yourself back on stable financial ground.
As you’re no doubt aware, depending on the years spent in post-secondary academia and the amount of funding you borrowed in order to get that coveted piece of paper, student loan debts can become quite large. Typically, when you’re studying, and thus paying interest only, or, in the case of an OSAP loan, nothing at all, the debt may not seem like a big deal. However, once you graduate and are required to start paying it back, with interest, things can become very challenging, very quickly.
A consumer proposal has become a very valuable resource for those looking for relief from debt that has grown to overwhelming proportions. Consumer proposals are great because, in addition to stopping interest and combining the various payments into one manageable monthly payment, a proposal typically results in an overall reduction of your total debt. However, there are certain things you need to know with regard to OSAP loans and consumer proposals.
First things first: the only way to clear an OSAP loan if you have not been out of school for 7 years is to pay it in full. If that 7 year period has not passed yet, a consumer proposal (CP) won’t result in a reduction of that debt, and once the CP is over you’ll still be required to pay it. That being said, even if it isn’t reduced, a portion of your proposal payment will go to the OSAP loan in addition to your other creditors.
On that note, if you are facing enforcement action as a result of the OSAP loan, a consumer proposal will stop it, even if you have not been out of school for 7 years. This is an important consideration if your wages are being garnished or your bank account has been frozen.
On the other hand, if an OSAP loan is over 7 years old – meaning you’ve been out of school for 7+ years – you can include it in a consumer proposal. This means, in addition to the other debts you’ve accumulated, the overall OSAP loan will likely be reduced.
So, to summarize, if collection action has commenced prior to the 7 year date, a consumer proposal will stop all enforcement action. You will be required to pay the loan in full, but you will have some relief, especially when your other creditors are included in the proposal. If you’ve been out of school for more than 7 years, you can include it as you would any other debt.
At DebtCare, we know how difficult it can be to deal with student loans. Often a consumer proposal represents your greatest opportunity for relief. Want to discuss your options?
Please get in touch with us today by calling 1 (888) 890-0888.