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CERB repayment debt: what you need to know

Posted on 28 March 2023

Written by Jeff Adiken

At Spergel, each day we meet hundreds of Canadians each looking for debt relief, advice, and answers on how they can best manage both consumer and corporate debts. As experienced Licensed Insolvency Trustees, we have also helped over 100,000 Canadians on their journeys to debt relief, and we treat each individual with the compassion and understanding they deserve. If you received Canada Emergency Response Benefit (CERB) during the pandemic, you may have also received mail – or a notice of redetermination – to inform you that you need to make CERB repayment. For many Canadians, this news may have been unexpected, putting them in a difficult situation whereby they now need to find the funds to make this repayment. If you are concerned about making CERB repayments, in this article we share all you need to know about CERB repayment debt and your available options. You are certainly not alone.

What are Canada Emergency Response Benefit (CERB) repayments?

In some circumstances, you will need to repay the CERB you received during the pandemic. The following situations are the most common:

  • You began working again sooner than you expected
  • Your employer paid you retroactively
  • You received duplicate CERB via Employment Insurance (Service Canada) and the Canada Revenue Agency (CRA) for the same timeframe
  • You did not meet the CERB eligibility criteria

From our own discussions with individuals and clients, there appeared to be a lot of confusion around the minimum income to be eligible for CERB ($5,000 in income earned in either 2019 or in the year before receiving CERB payments), subsequently leading to many people owing CERB repayment debt. Many Canadians believed this income could be gross instead of net income, and some types of income are also ineligible for CERB, including pension income and Canada Child Benefit. Subsequently, they were ineligible to receive CERB payments but received it regardless due to the speed with which the Canadian government rolled out the program. Many Canadians received CERB incorrectly, and now the CRA is trying to reclaim as much of the CERB payments as it possibly can.

What to do if you need to make CERB repayments

You may have received debt letters from the CRA, and feel unsure of what to do next – especially if the repayment request is completely unexpected. It can feel completely overwhelming and stressful, particularly if you do not have the funds to make the repayments. Given that the purpose of CERB was to provide temporary relief for Canadians with a reduced or absent income during the pandemic to cover essential living costs, most Canadians have long spent the benefit they received. The CRA understands this, and has decided to be a little more lenient with CERB repayments over other collections, like tax debt. They have said that they can arrange flexible payment plans depending on each individual, and will not charge penalties or interest on payments where it appears an honest mistake was made in applying for CERB in the first place. Keeping a strong line of communication with the CRA is important – if you realize you cannot make your CERB repayments in full, you should contact the CRA. They will try to work with you on a repayment plan, and are less likely to pursue further action against you if you have not made your repayments if you communicate your financial difficulties in a timely manner.

What if you cannot afford your CERB repayments?

If you are struggling to make your CERB repayments, there are a few points to note regarding the CRA’s collection on debts. It is likely the CRA will treat CERB in a similar way to other government debt like tax debts. For this reason, you should not avoid filing your tax returns – it will not mean you can avoid outstanding CERB repayments. Aside from making your CERB repayment in full or via a repayment plan, the only way to reduce or gain complete debt forgiveness on your CERB is to file a consumer proposal or bankruptcy via a Licensed Insolvency Trustee. Licensed Insolvency Trustees are the only professionals in Canada legally able to file all forms of debt relief. This is because CERB repayments are considered dischargeable debt that can be forgiven, much like tax debt. Learn more about the CERB relief available to Canadians struggling to make their CERB repayments.

CERB repayment debt solutions

You may be relieved to learn that there are debt relief solutions when it comes to reducing or gaining debt forgiveness on CERB repayment. As well as government debt, you can also handle any other unsecured debts you may have at the same time, including credit card debt, payday loans, and tax debts. The two key forms of CERB repayment debt relief include a consumer proposal and filing bankruptcy:

Filing a consumer proposal

A consumer proposal is a legal form of debt settlement that can reduce your debt by up to 80%. It is the process of working with a Licensed Insolvency Trustee to determine an affordable monthly payment for your debts. This is then proposed to your creditors, and your Licensed Insolvency Trustee will negotiate with them on your behalf. Once approved, you will only need to make this manageable monthly payment for a fixed period of up to five years maximum. At Spergel, we have a 99% acceptance rate on any consumer proposals we file. There are a number of advantages of filing a consumer proposal – they enable you to keep your assets and offer full protection from your creditors. To learn more about filing a consumer proposal, book a free consultation with Spergel.

Filing bankruptcy

Bankruptcy is the process of assigning any non-exempt assets you may have over to a Licensed Insolvency Trustee in exchange for the clearance of your unsecured debts. Your assets will be sold with proceeds going towards the repayment of your creditors. For most first time bankruptcies in Canada, you can be discharged of your debts and free to enjoy life after bankruptcy in as little as nine months. While many Canadians think that filing bankruptcy means you will lose everything, this is simply not the case. It is designed to give you a fresh financial future, and so you can keep essential assets like your home, car, and clothing up to a certain value. Bankruptcy has a number of other key advantages, including offering full protection from your creditors via a stay of proceedings. To learn more about filing bankruptcy in Canada, book a free consultation with Spergel.

What are the consequences if you do not repay CERB?

As with any kind of government debt, like tax debt, the Canada Revenue Agency takes no prisoners when it comes to reclaiming their money. Unlike other creditors, they have unrivalled powers when it comes to collection. Where other creditors may first need to be granted a court order to take action, the CRA can act quickly and often without warning. Frequent actions we see taken by the CERB include the following:

For this reason, it is always best to face your financial situation head on as soon as you can. Our expert Licensed Insolvency Trustees are here to support you in beginning a fresh financial future.

If you are feeling overwhelmed by the thought of CERB repayment debt, you are certainly not alone. At Spergel, our Licensed Insolvency Trustees are here to help you by reviewing your financial circumstances and walking you through your CERB repayment debt relief options. We treat all individuals with compassion and understanding. Book a free confidential consultation with Spergel today – you owe it to yourself.

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Jeff Adiken

Jeff Adiken

Jeff Adiken is a Certified General Accountant and Chartered Insolvency and Restructuring Professional with over 18 years’ experience as an LIT (Licensed Insolvency Trustee). He also manages all of Spergel's personal insolvency offices and is our resident expert on credit card debt and debt-free living. When his 'manager hat' comes off at the end of the day, Jeff is happiest spending quality time with his family at home.

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