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 worked primarily with Christine, who was very friendly and outgoing. She was quick to help me, and explained everything I needed to know very well. She's quick to answer any questions I may have as well. The other members I spoke with were also very kind and jovial, and were happy to help me with anything they could. They made sure my proposal fit within my budget, and got everything going very quickly. I was happy to work with them, and would highly recommend their very friendly service!
Melissa McAllister
Very processional and understanding of my situation. Thanks to all your team.
Luc Valade
Jennifer Norton's exceptional assistance with my consumer proposal was life-changing. Her professionalism, expertise, and dedication were evident from the start. Jennifer's thorough explanations and attention to detail created a tailored proposal that set a clear path to financial freedom. She went above and beyond, advocating for my best interests and providing invaluable support. Thanks to Jennifer, I'm on track to a stress-free financial future. I wholeheartedly recommend her – she's not just a financial expert; she's a life-changer. Thank you, Jennifer!
They made a difficult situation, easy thank you.
Ray Barkley
I had a great experience with Christine from David Sklar & associates. Very professional, and easy to get through. Thank you
fukinwith doug
Great customer service and a smooth process to get your finances on track. Informative and thorough.
Adrian Downey
From the moment I sat down in the office, I felt welcome and at ease. Grace Cuffaro was both friendly and highly informative. She is extremely knowledgeable and answered all of my questions in detail, making sure I understood before moving on. I was reassured throughout the process that I was making the right decision and that it was not uncommon nor anything to be ashamed of. I didn't expect my appointments to be such positive experiences, but that's exactly what they've been!
P Bains
I was in a tough financial position and found myself searching for relief. I came across David Sklar & Associates page when doing my research on financial advice. The reviews were amazing, but I was concern because I didn’t know what to expect. I made the decision to set up a consultation and had the pleasure to meet with Jennifer Norton. Right from the beginning, she was attentive, knowledgeable, and pleasant to meet with. The experience was painless and very educational. Jennifer made sure I understood my choices, answered my questions, and concerns promptly, in person, over the phone and via email. I’ve been working with Jennifer for a couple months now and I am pleased that Jennifer is the manager handling my file. I would and have recommend Jennifer Norton, David Sklar & Associates to anyone in need of direction regarding finances.
A.L Thompson-Lawrence
I had my first meeting with Jennifer, she was really understanding and extremely helpful, and got everything done in a timely manner.
Tamas Wint
Jennifer Norton has been the most helpful throughout this truly embarrassing situation that I find myself in. She is informative, understanding, and there is absolutely no judgment. She has handled everything in a very professional and respectful manner and I am SO glad that I have them on my side. Definitely a huge weight off my shoulders.
Jody T
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