Pollard & Associates Inc. (www.pollardandassociates.ca), an insolvency and financial restructuring firm operating out of the GTA offers various debt solutions for corporate and personal circumstances. Angela Pollard, President of Pollard & Associates Inc., weighs in on the effects of the Canada Emergency Response Benefit (CERB) and the best approach to pay it back if you were not eligible to receive it. (Source: The Canadian Press, written by Salmaan Farooqui, February 16, 2021, https://www.ctvnews.ca/health/coronavirus/think-you-may-need-to-repay-cerb-best-to-start-planning-now-experts-say-1.5311048).

The article begins by sharing Alex Coucopoulos’ experience with CERB. The 20-year-old received a letter stating he is required to pay back $12,000 of the pandemic aid. As he discussed his eligibility with a Canada Revenue Agency representative, he was informed that he was eligible for the response benefit. His gross income in 2020 was over $5,000. However, the government agency said applicants were required to have a net income of over $5,000. Angela shares, “thankfully, the Canadian government made changes, therefore as the article states, “people who applied thinking they were eligible because of their gross income would no longer have to repay CERB.” Many families and individuals have endured enough stress during the pandemic. The worry of having to manage their CERB repayment is causing additional pressure during these times, as many are trying to recover and get back on their feet.”

D’Arcy McDonald, Senior Vice President of Deposits, Investments, and Payments at Scotiabank, shares, “But if you did receive that uncomfortable letter, you probably need to think about immediately filing your taxes to figure out what your obligations are to the government.” He continues to share, “filing taxes now will help clear up whether you owe the government money if you accidentally received both employment insurance and CERB, and if you can make a retirement savings plan contribution before the tax deadline to lower your amount owing for regular income taxes.” Angela agrees, “CERB came together quickly as an immediate response during a time of panic and uncertainty. Despite the confusion regarding gross and net income, the program was meant to be distributed to those who are eligible. Therefore, if you find yourself in a situation where you were not eligible for CERB and are struggling with CERB repayment, the first step is to file your tax return so that you can be aware of the total amount you owe CRA.”

The next step expressed in the article is to create a payment plan and use any available resources, such as your emergency savings. Angela suggests, “whenever you have incurred debt, you must evaluate what you owe and create a plan to pay back the debt. While dipping into your emergency savings should be a last resort, it is important to recognize the associated interest rates and penalties that can be accrued if you do not make payments to CRA on time. As with other forms of debt, there are many resources and solutions available for CERB repayment. You may wish to contact CRA to explore your options. Alternatively, if your debt has spiraled out of control and you can no longer manage to make necessary payments, you can contact a Licensed Insolvency Trustee to discuss possible options. At Pollard & Associates Inc., we can assist you in determining the best path forward and discuss possible resolutions to address your financial struggles, such as a proposal or personal bankruptcy. As a part of insolvency proceedings, we conduct debt counselling sessions with debtors to improve your financial literacy and provide you with effective budgeting tools in order to prevent the cycle of debt from reoccurring.”

D’Arcy McDonald mentions CERB repayment will be different from paying back private debt, for example, mortgages or credit cards. McDonald says, “I don’t think they’d want to put those people at further risk by making you repay too quickly when you and your family are not out of the woods.” Angela agrees, “although CERB repayment may not be the same as paying off other debt, debt is still debt and it is crucial to get ahead of the situation as penalties and interest tend to accrue quickly. If the pandemic has caused your financial situation to deteriorate significantly and you are no longer able to pay your bills, contact us at Pollard & Associates Inc. to determine if an insolvency proceeding is a good solution for you and your family.”