Unable to Make Your CERB Repayment? You Have Options

Thousands of Canadians have been issued a CERB repayment letter demanding repayment of Covid relief funds. If you’ve received such a letter, this situation needs to be addressed as soon as possible. Postponing payment, or failing to set up a payment plan with the entity that sent you the CERB repayment letter, can result in harsh penalties. 

Sadly, this CERB repayment is creating an undue hardship on many Canadian families who are already struggling to pay their bills. If this is the situation you’re in right now, we at Powell Associates want you to know that you do have options. In this blog, we’ll cover some of the steps you can take to resolve these CERB repayment issues.

How Much Time do you Have to Make Your CERB Repayment?

The deadline to pay back your CERB in full should be on the CERB repayment letter you received. If there is no way you will be able to make this payment in full and before the deadline, it is imperative that you contact the entity that sent the letter to make arrangements. They may be able to extend the deadline or help you make other arrangements.

What if you Can’t Make Your CERB Repayment In Full?

Neither Service Canada nor the CRA will negotiate the amount of your CERB repayment. If the CERB repayment letter you received states that you owe $10,000, you will not be able to negotiate a payment of less than that. 

If you accepted your initial CERB payment in good faith, meaning there was no fraud involved, you may be able to negotiate monthly payments. Even then, this unexpected monthly payment may be more than some families are able to pay comfortably. 

What if you Don’t Make Your CERB Repayment?

If you’re unable to make your CERB repayment in full or through a repayment plan, Service Canada and the CRA have numerous tools at their disposal to collect the money they are owed. They can use any of the following to recoup their money:

• Garnishing Wages
• Bank Account Liens or Siezures
• Asset  Liens or Siezures
• Home Liens or Siezures
• Offsetting (the garnishing of government benefits)

Unfortunately, Service Canada and the CRA have much more power than a normal creditor to collect the money they are owed. All of the above actions can be taken with very little notice, without the need to initiate court proceedings. This is why it is essential to address this CERB repayment letter as soon as possible.

Asking for a CERB Eligibility Review

If you feel that you have received a CERB repayment letter by mistake, you can ask Service Canada or the CRA to review your case to see if you were indeed eligible to receive CERB payments. This review, though, could take months to complete. 

During this time, Service Canada or the CRA will still try to recoup their money. One of the ways they will do so is by offsetting your government benefits. Most likely by garnishing your tax refunds and government benefits, including Canada Child Benefits and/or Working Income Tax Benefits. This creates even more financial hardships for people struggling to make ends meet.

Other Options for Dealing with CERB Repayment

If paying your CERB repayment in full or in monthly payments isn’t feasible, you still have a few options available to you. The Office of the Superintendent of Bankruptcy has determined that CERB repayments are considered “dischargeable debt”. This means you can include your CERB repayment in a consumer proposal or a personal bankruptcy filing.

In addition to consumer proposals and bankruptcy, you can consider debt consolidation to make your CERB repayment easier. Restructuring and consolidating all of your debt, including your CERB repayment, can reduce your total monthly obligations.

Let’s take a closer look at these three options to see if they’re right for you.

Debt Consolidation

Debt consolidation might be your best option if you’re unable to make your CERB repayment in full. As Licensed Insolvency Trustees (LIT), Powell Associates can contact each of your creditors on your behalf, including Service Canada or the CRA. 

We can negotiate reducing interest rates, forgiving penalties, and lowering the total monthly obligations to each of your creditors. After debt consolidation, you will have one monthly payment to cover all your debt, including your CERB repayment.

Benefits of debt consolidation include:

• Reduced interest rates
• No more calls from creditors
• No garnishing of government benefits
• More time to make CERB repayments
• Lower monthly payments
• No government debt

Consumer Proposal

As we mentioned earlier, neither Service Canada nor the CRA will discuss with you full or partial CERB repayment forgiveness. They are willing to work with a Licensed Insolvency Trustee, though, to reduce your total CERBP repayment amount through a consumer proposal.

This is a good option for anyone who is having trouble making not just their CERB repayment but is falling behind on most or all of their monthly payments. A consumer proposal will forgive most of your debt, including your CERB repayment while allowing you to keep your assets.

Benefits of a consumer proposal include:

• Partial forgiveness on unsecured debt
• Partial or full CERB repayment forgiveness
• Government benefits are no longer at risk
• No more threatening calls from the government or creditors
• Combine all of your unsecured debt into one low monthly payment
• No more credit card payments
• No more late penalties or accrued interest

Bankruptcy

While this may seem like a drastic step, filing for bankruptcy may be your best bet at a fresh start financially. Bankruptcy is an option for anyone looking at a hefty CERB repayment bill or people whose monthly obligations have become completely unmanageable. 

Filing for bankruptcy is the only way to achieve complete CERB repayment forgiveness. In addition to CERB forgiveness, most or all of your unsecured debt can also be eliminated. And, depending on your situation, you should still be able to keep your home should you choose.

Benefits of filing for bankruptcy include:

• Most or all unsecured debt is forgiven
• Complete CERB repayment forgiveness
• No more calls or letters from creditors
• Can be discharged in as little as 9 months
• All penalties, late fees, and accrued interest forgiven
• Less stress every month worrying about which payments you can afford

Contact Us About Your CERB Repayment Options

Being in debt to the government can be a frightening experience, causing an unbelievable amount of stress for everyone involved. The key to dealing with CERB debt is to act quickly. Waiting too long to deal with this could result in actions, such as garnishments or a temporary loss of government benefits, that are not reversible. 

If you’ve received a CERB repayment letter and are concerned that this is a financial obligation you aren’t going to be able to meet, we can help. Reach out to us, and we will review your situation. We’ll help you determine which of the above options is best suited to your needs and walk you through every step of the process.