How can I manage my CERB repayments?

The Federal Government rolled out the Canada Emergency Response Benefit (CERB) to support those who were unable to work during the COVID-19 pandemic — and many people signed up quickly before the eligibility requirements were complete.

You may be one of the many Canadians who signed up for CERB to receive a notice saying you need to repay the benefits you received. On top of that, you may already be dealing with financial stress as rising inflation eats into your personal savings.

Don’t worry — many Canadians are in the same position and there are solutions that can help you manage your repayments. We’re here to answer your questions about your CERB repayment and what you should do next if you can’t pay back your CERB debt or any other debt immediately.

How do I pay back my CERB benefits?

The government introduced CERB payments during the COVID-19 pandemic to provide $2,000 for each eligible four-week period to Canadians who were unable to work during lockdown.

The program was rolled out quickly to respond to the urgent situation. Many people signed up without understanding if they met the eligibility criteria and collected payments they were not eligible to receive. Some people also received multiple payments by mistake.

If you are one of those many Canadians, the government may now be requiring that you repay the full $2,000 for each four-week period that you were not eligible to receive it.

You can pay back your CERB overpayments in full or over a period of time. The Canada Revenue Agency (CRA) does not charge interest on COVID-19 benefit debts and can help you arrange a repayment plan. The repayments can be made to the CRA online, by mail, or in person.

What are the consequences of not repaying my CERB benefits?

The CRA can impose several penalties if you fail to pay back the CERB benefits you owe, including:

• Wage garnishment
• Seizures or holds on your bank accounts
• Registering a lien against your assets
• Seizing your home or assets to pay back your debt
• Allocating your tax benefits toward your debt

These consequences may look frightening — especially if you weren’t expecting to repay your CERB benefits and cannot afford to repay the debt immediately. However, there are many options available to help manage your CERB repayment and take control of your financial future.

What should I do if I can’t pay back my CERB benefits?

Respond promptly when you receive a notice of CERB repayment — especially if you can’t pay it back immediately. The CRA can help you arrange a timeline to pay back what you owe. Your debt can also be written off if you file for Bankruptcy or enter into a Consumer Proposal.

Contact a Licensed Insolvency Trustee (LIT) if you’re struggling to pay back your CERB benefits. They’ll help you review your options and choose the solution that works best for your situation to help you achieve a debt-free future.

Option 1: Make a plan with the CRA

Contact a CRA agent if you are struggling to pay back your CERB benefits. They can work with you to arrange an affordable repayment plan so you can pay back your CERB benefits on a timeline that works for you.

The CRA will take action if you fail to make your repayments on schedule and they don’t hear from you in a reasonable timeframe. Make sure that the CRA is aware of your situation and communicate with them throughout the repayment process to avoid facing any of the strict consequences.

Option 2: Enter into a Consumer Proposal

If you are not able to reach a repayment agreement with the CRA, you can enter into a Consumer Proposal to release your debt. A Consumer Proposal can only be filed by an LIT, who will review your income and expenses to determine the monthly debt payment you can afford and use that amount to calculate a fair payment with your creditors — including the CRA.

If your creditors vote in favour (50 percent, plus one by dollar value owed) of your Consumer Proposal, the terms are set and you will make monthly payments to the LIT. These payments will go to your creditors until all your debts such as the CERB benefit repayment are settled in accordance with your Proposal.

You can take up to five years to repay a Consumer Proposal, but there is no penalty for paying it off sooner. Many people choose this option because it is budget-friendly, flexible, has fewer duties, offers more opportunities to keep your assets, and is less damaging to your credit rating than a Bankruptcy.

Option 3: File for Bankruptcy

Filing for Bankruptcy can also release you from debts such as the CERB benefits repayment. Like a Consumer Proposal, Bankruptcy can only be filed by an LIT — who also will notify your creditors and deal with them directly on your behalf.

During Bankruptcy, you must submit monthly income and expense reports to the LIT, attend two budgeting and money management counselling sessions, and pay any required amounts to the LIT. Any such amounts will be calculated in accordance with the Bankruptcy and Insolvency Act rules. The assets you get to keep vary from province to province and the LIT can help you understand which assets you may be eligible to hold onto.

Bankruptcy typically lasts nine to 21 months and you will be discharged after you meet all the requirements. It will remain on your credit score for six to seven years after you have been discharged if it is your first Bankruptcy.

Get the right advice

If you are struggling to pay back your CERB benefits, don’t hesitate to reach out for help. MNP Licensed Insolvency Trustees can help you review all your options to choose the solution that works best to help you manage your CERB repayments and achieve a debt-free future.

Additionally, visit our A Guide to Tax Debt for more CERB and tax debt related information.