The CERB and bankruptcy

The Canada Revenue Agency recently announced its intention to claim overpaid Canada Emergency Response Benefit (CERB) amounts. This is likely to affect many Quebecers. So the very pertinent question arises: To the extent that I am experiencing financial difficulties, is it possible to include such a debt in a bankruptcy or a proposal?

The Office of the Superintendent of Bankruptcy, which is a branch of the federal government, came to answer^[1] this question very clearly. Thus, it has been determined that the CERB’s debt, even the debt received in excess, is therefore in the same rank as your credit cards, loans and lines of credit and it will only be able to receive its share of the sums that the trustee may have to distribute among your creditors at the end of your file. After your debts have been released, the government will not simply be able to decide to continue to claim the outstanding balance of its debt from you, nor to deduct amounts from tax refunds that may be due to you in the future.

The only exception to this rule is if the government was able to prove in court that you made false statements to obtain the CERB, such as stating that you made less than $1,000 a month when you were making $3,000. However, even if a person knowingly received the CERB when he or she knew he or she was not entitled to it, the government cannot be a judge and a party to it. If he wishes to claim the said sum from you after a bankruptcy or a proposal, he will have to address an application to the Court, prove it and, above all, assume the costs. Without such a step and a favorable judgment of the Court, this debt will be over.

If you have general questions or financial difficulties, do not hesitate to ask our personal finance experts for advice. It’s free, confidential and without obligation.

[1] Guidelines for Overpayments of the Canada Emergency Response Benefit.