Can You Get an OSAP Loan While in A Consumer Proposal?

Table of Contents

Have you recently filed a consumer proposal and are concerned about how it may affect your ability to get funding through the Ontario Student Assistance Program (OSAP)?

The good news is that obtaining an OSAP loan while you’re in a consumer proposal (or bankruptcy) is possible. You’ll need to submit additional information with your application for the OSAP program to decide whether you qualify for financing.

However, even with a complete application, there’s no guarantee you’ll get approved for funding. OSAP reviews each application on a case-by-case basis and will assess various factors to determine your eligibility.

This article will explain how you can apply for an OSAP loan after filing a consumer proposal or personal bankruptcy.

Why it’s harder to get an OSAP loan after filing a consumer proposal

Your credit score will significantly decline when you file for insolvency through a consumer proposal (or bankruptcy). And with bad credit, getting a loan application approved will prove more challenging. Lenders will perceive you as a high-risk borrower and will be less willing to extend financing to you.

Can you get an OSAP loan with bad credit?

Can you still get an OSAP loan if you have bad credit? The short answer is it depends.

If you’re 22 or older, the government will run a credit check on you to review your credit history. They’ll look to see whether you have been delinquent for more than 90 days on three or more credit accounts (with a combined value of $1000 or more) in the past three years. If they find evidence of this delinquency, you’ll be ineligible to receive funding through OSAP.

What happens if you fail this credit check? You can send a credit check appeal to the OSAP Appeal Board if your poor credit history is due to financial difficulties beyond your control. You’ll also need to prove that you’ll be able to repay your student loans in the future. If your appeal is successful, you may receive an OSAP loan despite your tarnished credit score.

How to get an OSAP loan while in a consumer proposal

There’s nothing to prevent you from applying for OSAP funding with an active consumer proposal (or bankruptcy). What’s key is properly disclosing the details of your proposal, including your discharge status. The OSAP program will use this information as part of the application review process and decide whether to grant you financing.

While each case is different, in general, you’re more likely to receive approval for an OSAP loan if:

  • It’s your first time applying
  • You don’t have previous student loans or other government debts that are in default and included in your consumer proposal
  • You’re current with your consumer proposal payments

Complete the OSAP application form

The first thing you’ll need to do is complete an OSAP application form. Ensure you fill out each section thoroughly, especially those that pertain to insolvency. Otherwise, your application will be rejected.

The OSAP application form contains three questions that relate to consumer proposals, which appear on page 17:

  • Question #610: Have you ever filed for bankruptcy or initiated a related event?
  • Question #611: Is your bankruptcy discharged?
  • Question #612: What is the date you filed for bankruptcy or initiated a related event?

The term “related event” refers to any insolvency proceeding under the Bankruptcy and Insolvency Act. Naturally, this includes a consumer proposal.

Provide the required documentation about your consumer proposal

Let’s say you answered “yes” to question #610 and “no” to question #611. In other words, you have not yet completed your consumer proposal. In this scenario, you’ll need to provide OSAP with a letter from your Licensed Insolvency Trustee that confirms the following:

  • The Government of Canada and the Province of Ontario aren’t creditors for government-guaranteed student loans included in your proposal
  • No funds that you receive from OSAP will be distributed to your creditors
  • The consumer proposal filing date

Alternatively, let’s assume you’ve already completed your proposal (meaning you answered “yes” to question #611). In that case, you must provide the following:

Note: Suppose you previously negotiated student loans through an insolvency proceeding on or after May 11, 2004. In that case, you need to submit proof that there’s no outstanding balance. Depending on your circumstances, you may also need to provide additional documentation.

What if you previously received student loans?

Have you received funding for government-guaranteed student loans in the past? If so, you’ll need to meet one of the following two conditions to qualify for further financing while in a consumer proposal:

  1. You’ve paid off your prior student loan debt in full. If you’ve fully repaid your past student debt, you must provide proof that there’s no outstanding balance. Valid proof can include a statement from the National Student Loans Service Centre (NSLSC) or a letter from your lender (Canada Student Loans or OSAP).
  1. You plan to continue your current study program. In this case, you can provide a letter from your post-secondary institution that confirms the following details:
  • You were enrolled in your educational program at the time you filed your consumer proposal
  • You’re currently enrolled in the same program in which you were enrolled when you filed your consumer proposal
  • You took no study break that lasted longer than six months following your consumer proposal filing date

Another scenario is that you cleared prior student loan debt through a past bankruptcy or consumer proposal. In this case, you’ll only qualify for a new OSAP loan if it’s been at least three years since you received your bankruptcy discharge or completed your proposal. 

In other words, OSAP will give you access to additional financing for an educational program you’ve already started. However, they won’t offer you a loan for a new program until:

  • You’ve paid off your existing student debt in full, or
  • Three years have passed since you cleared your student loan debt through an insolvency proceeding

Our final thoughts

You can still get access to an OSAP loan after filing for a consumer proposal. While there’s no guarantee you’ll qualify for financing, there’s no harm in applying either. Just remember to be honest and transparent. Disclose all the details of your consumer proposal and provide the relevant documentation as required.

Never hide any facts about prior OSAP student loans you received or bankruptcies or consumer proposals you’ve filed. The OSAP program will find proof of any financial problems, outstanding debt, and negative records during your credit check.

Are you contemplating a consumer proposal to resolve your debts but still have questions about how it will impact your eligibility for a student loan? If so, book a free consultation with David Sklar & Associates. One of our seasoned Licensed Insolvency Trustees will assess your financial situation and advise if a consumer proposal is the best debt relief solution for you.

Be sure to visit our blog to learn how student loans are treated under a consumer proposal.

Attending a college or university should be a rewarding experience, not a disheartening one. If your debts are weighing you down, contact David Sklar & Associates today to learn how you can deal with them once and for all. We’ll be there for you every step of the way!

Take Your First Step Towards A Debt Free Life

If you are overwhelmed by debt, call us at 1-844-962-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you. 

Share This!

I had a great experience with Jerry Janiec and his team at David Sklar and associates. Within a week I was already accepted and filed for bankruptcy and in a few months I will be debt free! It feels like a lot of stress is off my shoulders. Jerry and his team are very friendly, helped me along the way and was there to explain every detail of the process with me. He gave my his card and is just an email/call away if I need any help with paperwork and completing my duties. He is a very patient and kind professional and I am so glad I chose him and this company to help me fix my financial problems. If you need help with a consumer proposal or bankruptcy (like I did) I highly recommend Jerry Janiec and David Sklar and associates!
Lisa Gomez
1709492022
Very professional and caring. Cori, explain everything and listened to my situation. If I didn't understand, she will explain it again. I'm glad that I went to David Sklar and Associates for my financial difficulties.
Richard Hong
1709358914
Great experience with this company . Especially Jennifer N. communication was amazing and really helped out my situation. Highly recommended her and David S .
Jay Mil
1709336666
Everything went well. I will update in 5 years
Trisha C
1709311761
My experience with Cori was phenomenal. Cori took the time to explain the process thoroughly, listened to my concerns and reassured me. Cori has exceptional people skills and cares about the people she is helping. The experience throughout was professional, kind, warming and inviting.
Angie
1709250956
A huge thank you to Jackie S and to the David Sklar and Associates team. Steps made easy , Jackie S has been there during the entire process , whether it was through emails or phone calls . I felt acknowledged and respected . I’d recommend David Sklar and Associate at a heart beat !! Cheers , Dennis
Dennis Armstrong
1709249142
Very happy to talk with grace and she explained my options.Grace is very knowledgeable,friendly,and helpful. She made feel very comfortable,with her help I am on the road to be debt free. She relieved so much stress. I highly recommend them.
Kelley Roberts
1709243575
David Sklar & associates is the place to be if you’re looking for help on your debt consolidation. Kudos on their staff Miss Grace Cuffaro who were very patient guiding me on complying all required documents.
Nhie GU
1709082686
Reduced my stress and gave me a second life. Sincere heartfelt thanks to the team.
Selvaraj Dhanagopal
1709061781
I am very pleased with the experience with your company. Great customer service and very professional. They made me feel like dealing with caring and friendly people. Jackie is a sweet lady. All of them very helpful.
Carolina Marroquin
1708815208
js_loader
DS david skalr icon

Book your free consultation.

Call 1-844-962-9200 or fill out the form below. We’ll do the rest.

Contact Us