BY SARAH SCHMIDT - Ottawa Citizen

Canada's student bankruptcy law barring graduates from discharging their student loans or 10 years after the completion of studies is unconstitutional, a lawyer argued before the Ontario Superior Court yesterday.

"The profile of the student debtor in bankruptcy is of an individual who is young, more likely to be a woman, and in worse economic shape than other bankrupts," argued Todd Burke, lawyer for University of Ottawa graduate Annick Chemer.

The Canadian Federation of Students, a national student lobby group, is sponsoring the constitutional challenge, launched after Ottawa amended the Bankruptcy and Insolvency Act in 1998. Mr. Burfce told the court the 10-year prohibition for student debtors violates the equality provisions of the Charter of Rights and Freedoms, including discrimination based on age and sex.

Further, the 10-year ban invites differential treatment based on a personal characteristic, namely a historically disadvantaged group of student debtors, said Mr. Burke, a partner at Cowling Lafleur Henderson.

Regular consumer debt can be discharged within nine months so the applicant can make a fresh start as a productive citizen, but only after a judge is. Satisfied the applicant is honest, yet finds himself in an unfortunate, dire financial situation.

Individual student debtors overwhelmed by a "crushing burden of debt" should be accorded the same right and judicial scrutiny, said Mr. Burke.

In Ms. Chenier's case, she graduated in 1997 with government student loans totaling $51,000- Armed with a master's degree in counselling, Ms. Chenier landed a job in her field at an annual salary of $34,000. Unable to make her monthly loan payments of $890 on her net monthly income of $1,800, she sought the help of a financial counsellor and asked her bank to reduce her monthly payments to more manageable amounts.

The bank refused, so Ms. Chenier defaulted on her student loan, automatically making her ineligible for government programs, such as interest relief, designed to help graduates struggling with repaying their loans.

Rick Woyiwada, representing the federal government, defended the lo-year ban, saying it's designed to protect the integrity of the student loan program.

Justice Gordon Sedgwick reserved judgment.