If you’ve recently received a CERB repayment notice and can’t afford to pay it back, you’re not alone. The good news is that you have options. Whether you can repay the balance over time or you’re struggling with multiple debts, understanding your choices is the first step towards regaining control of your finances.
Key takeaways
- If you can’t afford to repay CERB, don’t ignore the CRA.
- You may be able to arrange a payment plan based on your financial circumstances.
- If you’re struggling with multiple debts, a consumer proposal may include eligible CERB debt.
- Bankruptcy may also be an option in some situations.
- A Licensed Insolvency Trustee can explain all of your debt relief options during a free consultation.
Why am I being asked to repay CERB?
During the COVID-19 pandemic, CERB provided temporary financial support to millions of Canadians whose income had been affected.
Since then, the CRA has reviewed many applications to confirm recipients met the eligibility requirements. As a result, some Canadians have received notices asking them to repay all or part of the benefit.
You may be asked to repay CERB if:
- You didn’t meet the eligibility criteria.
- Your income didn’t qualify.
- You received duplicate payments.
- You received benefits you weren’t entitled to.
If you’ve received a repayment notice, review it carefully so you understand why the CRA believes you owe money.
Do I have to repay CERB?
If the CRA determines you received CERB that you weren’t entitled to, you will generally be required to repay it.
However, if you’re unable to pay the full amount immediately, that doesn’t mean you’re out of options. There are several ways to address the debt depending on your financial situation.
What happens if I can’t afford to repay CERB?
If you can’t afford your CERB repayment, try not to panic – but don’t ignore the situation.
The sooner you deal with the repayment notice, the more options you’re likely to have.
Depending on your circumstances, you may be able to:
- Arrange a payment plan with the CRA.
- Repay the balance over time.
- Explore debt relief options if you’re struggling with multiple debts.
- Speak with a Licensed Insolvency Trustee about your financial situation.
Can I set up a payment arrangement with the CRA?
In many cases, yes.
If you’re experiencing financial hardship, the CRA may be willing to discuss a payment arrangement based on your ability to pay.
Before contacting the CRA, it helps to understand:
- Your monthly income.
- Your essential living expenses.
- Your existing debts.
- What you can realistically afford each month.
A payment arrangement won’t reduce the amount you owe, but it may make repayment more manageable.
Can the CRA collect CERB debt?
Yes.
If a CERB repayment remains unresolved, the CRA has legal collection powers. Depending on your circumstances, it may recover the debt by applying future tax refunds or certain government benefit payments against what you owe. In some cases, the CRA may also take further collection action.
That’s why it’s important to address the situation as early as possible, even if you can’t pay the balance in full today.
What if I have other debts as well?
For many Canadians, CERB repayment isn’t the only financial challenge they’re facing.
You may also be dealing with:
- Credit card debt
- Personal loans
- Lines of credit
- Tax debt
- Payday loans
- Missed bill payments
If you’re struggling with several debts, focusing solely on CERB may not solve the underlying problem.
Looking at your overall financial situation can help you identify the most effective long-term solution.
Can CERB debt be included in a consumer proposal?
In many cases, yes.
If your CERB debt is owed to the CRA and you’re unable to repay it alongside your other unsecured debts, it may be possible to include it in a consumer proposal.
A consumer proposal is a legally binding debt solution administered by a Licensed Insolvency Trustee. It allows eligible Canadians to negotiate with their unsecured creditors – including, in many cases, the CRA – to repay a portion of what they owe through affordable monthly payments while stopping most collection action.
A Licensed Insolvency Trustee can review your circumstances and explain whether a consumer proposal is the right option for you.
Can bankruptcy eliminate CERB debt?
Depending on your financial circumstances, bankruptcy may also be an option.
Bankruptcy is designed for people who are unable to repay their debts and have no realistic way of becoming debt-free.
Whether bankruptcy is appropriate depends on your overall financial situation, the types of debt you have, and your long-term goals.
A Licensed Insolvency Trustee can explain how bankruptcy works, how it compares with a consumer proposal, and which option best fits your circumstances.
Should I ignore a CERB repayment notice?
No.
Ignoring a repayment notice won’t make the debt disappear and may limit your options later.
Even if you can’t afford to repay CERB today, taking action early can help you avoid additional financial stress and better understand the solutions available to you.
CERB repayment FAQs
Can I make monthly CERB repayments?
In many situations, yes. If you’re unable to repay the balance in full, you may be able to arrange a payment plan with the CRA based on your financial circumstances.
Can the CRA take my tax refund for CERB debt?
The CRA may apply future tax refunds or certain government benefit payments towards eligible amounts you owe. If you’re concerned about collection action, it’s best to address the debt as early as possible.
Does CERB debt affect my credit score?
A CERB repayment itself doesn’t automatically appear on your credit report. However, broader financial difficulties associated with unpaid debt can have long-term financial consequences.
Can CERB debt be included in a consumer proposal?
In many cases, yes. A Licensed Insolvency Trustee can determine whether your CERB debt is eligible and explain how a consumer proposal works.
What if CERB isn’t my only debt?
If you’re struggling with CERB repayment alongside credit cards, loans, tax debt, or other financial obligations, speaking with a Licensed Insolvency Trustee can help you understand all of your available debt relief options.
Speak to a Licensed Insolvency Trustee
If you’re worried about repaying CERB, you don’t have to face it alone.
At Spergel, our Licensed Insolvency Trustees offer free, confidential consultations to help you understand your options. Whether a CRA payment arrangement, consumer proposal, or bankruptcy is the right solution depends on your individual circumstances.
We’ll take the time to review your financial situation, answer your questions, and help you choose the path that’s right for you.
Book your free consultation today and take the first step towards becoming debt free.
