An Ontario judge made the ruling Thursday, affecting records of more than 38,000 survivors who applied for compensation for abuses suffered while students at the schools.
It is not clear yet, however, whether there is any option to preserve the records of those survivors who have died since making their claims.
A three-day hearing was conducted in Toronto in July in which different parties put forward a number of different options for what should happen to the records.
The Truth and Reconciliation Commission wanted the documents transferred to the National Research Centre on Residential Schools being established at the University of Manitoba.
Justice Paul Perell, however, mostly sided with the arguments put forth by Dan Shapiro, who heads up the Indian Residential Schools Adjudication Secretariat, which is holding individual hearings for survivors and assessing their claims. Shapiro wants the documents destroyed with the caveat all claimants be notified they can have their documents preserved.
Shapiro argued the documents should be destroyed after two years.
Perell extended that period to 15 years and said a process will have to be created to notify the claimants of their choices. Claimants who agree will have their records redacted of all personal information and transferred to the National Research Centre.
Perell pointed to the testimony of a number of survivors who said they spoke to the adjudicating panel only on the condition their personal information would remain confidential.
"If this information is ever disclosed outside of my (claim) file, it would re-victimize and destroy me," one female survivor told the court, Perell's 68-page decision said.
Perell ruled the settlement process would not have proceeded as it did without assurances of privacy given to the survivors.
Ted Fontaine, who attended two residential schools in Manitoba between 1948 and 1960, said he's glad some of the records will be preserved to ensure the story of residential schools is not glossed over in future history books of Canada.
"I know I want mine kept," he said of the transcripts of eight hours of testimony he gave to an adjudication panel in 2010. "I think the history of Canada and what Canada has done would be minimized if these are not kept."
Fontaine said, however, he thinks the records from his brothers should be destroyed. Both have died and he does not believe it would be right to keep their documents without their approval.
Ry Moran, director of the National Research Centre, said the Truth and Reconciliation Commission has always been concerned about what would happen to these records.
"Survivor choice has always been paramount," said Moran. "We're satisfied survivors will have choice."
Moran said the process to notify claimants of their choice needs to be established quickly.
"There are survivors that are passing away on a daily basis," he said. "This is a race against time."
More than 150,000 aboriginal children were forced into residential schools between 1857 and 1996 as Canada embarked on a mission of assimilation. Many students told stories of physical and sexual abuse, and the imprint of residential schools is still largely blamed for the rampant social problems facing aboriginal Canadians today.