Worried about repaying government benefits? You’re not alone. Many Canadian workers and families across the country who received federal support during the COVID-19 pandemic are now carrying a government debt and expected to repay their emergency benefits.
Receiving word you may need to repay some or all the benefits you received can be stressful to say the least. On top of regular bills and other debts, an unexpected new debt is something that will understandably upset many people’s finances. Most people don’t have the available cash to simply repay an unanticipated balance outright, and many others are still experiencing ongoing financial impacts of the COVID-19 pandemic.
Sands & Associates President Licensed Insolvency Trustee Blair Mantin joined Global News to explain the latest updates regarding CERB overpayment debt, and options to seek help if you’re a BC resident who can’t afford to repay a CERB debt that’s due. Watch the clip here and read more below.
About the Canada Emergency Response Benefit “CERB” and Repayments
The Canada Emergency Response Benefit “CERB” was a government measure aimed at providing financial support for Canadian workers who were impacted by the COVID-19 pandemic. The basics of this taxable emergency benefit were that eligible people could receive $2,000 for each applicable 4-week period. Financial assistance options later changed, and people could be eligible for recovery benefits such as Canada Recovery Benefit and others through Employment Insurance.
From mistakes in applications to receiving duplicate payments and more, there are a few reasons why people may now expect to, or have already been called on, to repay CERB they previously received, including:
- You applied and it was later determined you weren’t eligible (not meeting income requirement, etc.)
- You earned more income than you anticipated when you received CERB (resumed employment earlier than anticipated, received retroactive pay from employer, etc.)
- You received CERB from both EI/Service Canada and CRA for the same eligibility period
How is the Government Collecting on CERB Repayments?
Canada Revenue Agency (“CRA”) collects CERB overpayment and other COVID-19 benefit debts on behalf of Service Canada (among others) and has recently stated that:
- If you received benefits you weren’t entitled to, you will be sent a notice of redetermination.
- If you can’t pay your overpayment debt in full now, no interest or penalty will be applied on your COVID-19 benefit overpayment debts.
- If you have a balance owing your future payments, tax refunds or GST credits (all or a portion of) may be kept by CRA until your debt is repaid.
- Even if you have a payment arrangement in place CRA can take amounts from any credit you receive to repay your debt.
- If you’re receiving EI benefits repayment of CERB debt will be recovered by Service Canada automatically at 50% of your EI benefit rate.
I’m Worried About Repaying my CERB Debt – What Can I Do?
If you have discovered you must repay CERB amounts you received but are unable to repay the full amount you owe immediately, or can’t afford the minimum monthly payment on your statement of account, you may wish to contact CRA to discuss making manageable repayment arrangements.
- You can also connect with CRA if you disagree with your overpayment, suspect fraudulent activity or want to discuss an automatic recovery from EI benefits at a lower rate.
- Be careful of the fraudulent texts, calls and emails claiming to be CRA that are still widely circulating.
CRA has stated that if you don’t call or make payment arrangements, they may take legal action to collect on your balance owing. CRA is encouraging people not to ignore these debts, and we agree!
What Does it Mean for CRA to Take Legal Action to Recover a CERB Debt?
CRA is a powerful creditor who can quickly (with virtually no notice to you!) take extreme steps, but at present seems to be taking a milder approach to collecting CERB repayments, in contrast to their often-forceful approach to realizing on other debt. Common remedies often applied in collecting on debts such as student loans, government benefit overpayments, income tax debt, business GST and more include (but are not limited to):
- Garnishment of wages and other income
- Seizures or holds on bank accounts
- Registering a lien on your home or other property
Once CRA has started legal actions they won’t usually withdraw them, but a Licensed Insolvency Trustee can offer you solutions to make them stop. We highly recommend people seek a local Licensed Insolvency Trustee right away if challenges repaying ANY kind of CRA debt are anticipated. There are options for CERB overpayment forgiveness and virtually any other type of debt, whether owed to a government body or a common consumer lender.
Solutions to Consolidate or Forgive CERB (and Other) Debts
The Office of the Superintendent of Bankruptcy recently confirmed “erroneous or overpayment of CERB is a releasable debt in the event of an insolvency”. This means that working with a Licensed Insolvency Trustee you could write-off CERB debt, other government debt and of course consumer debts by either:
Declaring Personal Bankruptcy:
Canada’s personal bankruptcy process is brief, private and overall straight-forward, lasting as little as nine months in most cases. There can be surprising advantages to achieve full debt forgiveness if you’re no longer able to repay your debt.
OR! The alternative that most people are likely to choose which allows you to avoid bankruptcy with a legal non-borrowing consolidation option:
Filing a Consumer Proposal:
A Consumer Proposal is a personalized debt management tool for Canadians that allows you to settle all debts in a consolidated reduced repayment balance. Without borrowing, added interest or administration fees, Consumer Proposals are a highly unique and affordable option to consolidate and often substantially cut your debt.
Besides repaying your balance in full, accessing legal debt resources such as a Consumer Proposal or bankruptcy through working with a qualified Licensed Insolvency Trustee are the only methods CRA will accept to negotiate or forgive government debts.
In our experience as Licensed Insolvency Trustees many people struggling financially have found themselves in difficult situations aggravated due to factors outside their control. Dealing with a debt problem can feel hopeless, but you are not alone – and solutions and support are available. You deserve to live without debt and its overwhelming stress.
Get support, understand your options and move forward with the debt-free plan that’s right for you. Connect with a local Licensed Insolvency Trustee – book your free confidential non-judgmental consultation today.