On April 17, 2025, the Supreme Court of Canada (SCC) released its decision, Piekut v Canada, 2025 SCC 13, in which the SCC declined to release the plaintiff from her student loan debt, finding that she sought relief too close to when she ceased being a student. Significantly, this decision clarifies how courts across the country should interpret federal bankruptcy and insolvency law.
Specifically, the Bankruptcy and Insolvency Act, RSC 1985 c B-3 (the "Act"), states that a bankrupt individuals may receive a discharge order releasing them from all of their debts, subject to exceptions listed in Section 178(1). One exception under Section 178(1)(g)(ii) of the Act applies to student loans, where the date an individual files for bankruptcy must not fall within seven years of the date that the individual ceased being a full or part-time student.
Prior to this decision, there was no universal approach for how courts across the country interpreted the date on which an individual ceased being a student. Rather, provinces typically interpreted the legislation in one of two ways, using either a single-date or multiple-date approach. Specifically, courts in Quebec and British Columbia tend to use the single-date approach, finding that an individual stopped being a student on the date closest to when they filed for bankruptcy.
On the other hand, courts in Ontario and Newfoundland and Labrador, and registrars in bankruptcy in Nova Scotia, Saskatchewan, and New Brunswick, apply the multi-date approach. This means that these jurisdictions recognize multiple dates upon which an individual stops being a student if that individual took multiple programs of study with different end dates.
The recent Supreme Court decision found in favour of utilizing the single-date approach over the multi-day approach.
In this decision itself, the plaintiff, Izabela Piekut, attended three post-secondary programs between 1987 and 2009. She received federal student loans for her first two programs from 1987 to 1995, and again from 2002 to 2003. Piekut self-financed her third degree, which she pursued from 2006 to 2009.
In 2013, Piekut made a consumer proposal to repay her student loans over a period. In 2019, she sought a declaration through the Supreme Court of British Columbia that she stopped being a student in 2003 when she completed her loan-funded studies. She argued that since she self-financed her third program, it was incorrect to use 2009 as the date she stopped being a "student" for the purposes of bankruptcy legislation.
However, the Supreme Court of British Columbia dismissed Piekut's application. Applying the single-date approach, the Court found that Piekut ceased being a student in 2009 and that, consequently, the consumer proposal that she made in 2013 fell within the seven-year period such that she could not be discharged from the debt.
Piekut appealed to the Court of Appeal of British Columbia who upheld the lower court's decision. On further appeal to the SCC, the SCC agreed with the single-date approach, finding that Piekut ceased being a student in 2009, which disqualified her from a discharge in 2013 when she filed the consumer proposal.
In reaching their decision, the Court used the modern approach to statutory interpretation. Writing for the majority, the Honourable Justice Mahmud Jamal found that the grammatical and ordinary meaning of the text of the Act, alongside the goals of the act and Parliament's intentions, supported the single-date approach.
Specifically, Justice Jamal wrote that the text of the Act itself shows a sense of finality regarding when an individual stopped being a student. Further, the single-date approach reflects three policy goals defining the legislation, which includes to:
- Reduce government losses from individuals defaulting on their student loans;
- Ensure the sustainability of government student loan programs for future students; and
- Give borrowers an opportunity over a continue period to capitalize on their education and repay their loans.
Comparatively, the majority of the SCC found that the multiple-date approach leads to absurdity, as any break in that individual's studies would qualify as a stop-date of them being a student such that the seven-year period would start. This would allow a discharge of student loans for an individual before the government could then recover the debt.
Writing for the dissent, the Honourable Justice Andromache Karakatsanis wrote that she would have allowed Piekut's appeal in part, as she believed that the seven-year period functions as a conditional statutory bar that allows the discharge of student debt once the individual has not been a student for seven years. This, she said, would have discharged loans that Piekut accrued before she ceased being a student in 1995, as she would have met the seven-year minimum by the time she began her next program in 2002.
In response to the decision, the Canadian Association of Insolvency and Restructuring Professionals wrote that they hoped for an outcome that provided more flexible conditions for discharge of old student loans to promote a fresh start. However, the organization agrees that this decision provides necessary clarification to consistently interpret and apply bankruptcy and insolvency laws across the country.
Author: Kristen Farmer
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