During the COVID-19 pandemic, millions of Canadians applied for the Canada Emergency Response Benefit, or CERB. The government moved fast to get money out the door. Eligibility was self-certified, and the application process was simple by design. Now, years later, the Canada Revenue Agency is in an active enforcement phase, and many Canadians are receiving collection notices for CERB they have been told to repay.
We are a debt law firm licensed by the Law Society of Ontario — we work exclusively for you, not your creditors, with a legal duty that runs entirely to your interests. We help Canadians reduce or eliminate serious unsecured debt through legal processes like Consumer Proposals, Division 1 Proposals, and debt settlement, and we only get paid when we save you money. Learn more about our team on our About page.
If you are in that situation, you are not alone. And you are not without options. This article explains why people are being asked to repay CERB, what the CRA can do if you do not, and what legal paths are available to you, including options that may significantly reduce the debt.
Key fact: CERB repayment debt is treated as CRA debt. The CRA has powerful collection tools it can use without going to court, including wage garnishment and bank account seizures. However, CERB debt is also a releasable debt under the Bankruptcy and Insolvency Act. That means it can be included in a Consumer Proposal or discharged in bankruptcy.
What Was CERB and Why Are People Being Asked to Repay It?
CERB was a $2,000-per-month benefit the federal government introduced in March 2020 to support Canadians who lost income due to COVID-19. It ran from March 15, 2020 through September 26, 2020, and was one of the largest emergency benefit programs in Canadian history.
The CRA made it easy to apply. Self-certification meant you simply declared that you met the eligibility criteria. The government’s priority at the time was speed, not verification. The audits came later.
The most common reasons people are now being asked to repay CERB include:
- You had employment income during the period: To be eligible for CERB, you could not have earned more than $1,000 (gross) in a 14-day period at the start. Some recipients continued working part-time and crossed that threshold without realizing it would disqualify them.
- You did not lose income due to COVID-19: Eligibility required that you stopped working or had hours significantly reduced specifically because of the pandemic. Those who applied without meeting this test are now being flagged.
- You received duplicate payments: Some Canadians received CERB from both the CRA and Service Canada. These duplicate amounts are now being collected.
- You did not meet the $5,000 prior year income requirement: CERB required that you had earned at least $5,000 in the 12 months before your application or in 2019. If you did not meet this threshold, the CRA may now determine you were ineligible.
- You received other benefits during the same period: Employment Insurance and CERB could not be received at the same time for the same period. Overlapping claims are being identified and recovered.
What the CRA Is Doing Now
The CRA spent several years reviewing CERB applications. As of 2024, the agency moved into active enforcement. For Canadians who received notices of repayment and did not respond or cooperate, the CRA has begun issuing formal legal warnings and, in some cases, taking collection action.
This means wage garnishments, bank account seizures, and interception of tax refunds are now real possibilities for those who have not addressed their CERB debt. The CRA is treating this debt the same way it treats unpaid income tax. The collection process follows the same steps and uses the same powers.
The CRA does not need a court order to garnish your wages or freeze your bank account for CERB repayment debt. They can send a Requirement to Pay directly to your employer or your bank. This can happen with no additional warning once a legal notice has been issued. To understand how garnishment works and what can stop it, see our guide on wage garnishment in Canada.
Does the CRA Charge Interest on CERB Debt?
This is an important distinction. Unlike regular income tax debt, the CRA has confirmed it does not charge interest on COVID-19 benefit debts, including CERB repayments. This is good news. Your debt is not growing with compounding interest the way a tax balance would.
However, this does not mean there is no urgency. The CRA is still actively pursuing collection, and the principal balance alone can be substantial. If you received multiple CERB payments, your repayment amount could be several thousand dollars or more. And interest-free debt in the hands of the CRA is still subject to their full range of enforcement powers.
What Happens If You Cannot Afford to Repay
Many Canadians who received CERB are now in a worse financial position than they were during the pandemic. Job losses continued. Living costs increased. Carrying a CERB repayment obligation on top of credit card debt, car loans, and rent is genuinely difficult for a lot of people.
If you cannot afford to repay your CERB debt in full, there are several paths worth knowing about. For a broader overview of all debt relief options available in Canada, our guide on debt relief options in Canada covers the full landscape.
Payment Arrangement with the CRA
You can contact the CRA and ask to set up a repayment plan. The CRA will review your income and expenses and may agree to a schedule of smaller payments over time. This is often the first step people take. The advantages are that it does not affect your credit and does not require any formal legal process. The disadvantages are that it does not reduce the amount you owe, provides no legal protection if your situation changes, and can be cancelled if you miss payments.
Financial Hardship Review
If you are in genuine financial hardship, the CRA may review your case individually. This is not a formal program with set criteria, and it is not guaranteed to result in any reduction. It is a case-by-case discretionary process. Most people who explore this path do not receive meaningful relief from it.
Consumer Proposal
A Consumer Proposal is a formal legal process under the Bankruptcy and Insolvency Act. It allows you to make an offer to all of your unsecured creditors, including the CRA, to repay a portion of what you owe over up to five years. If the majority of creditors by dollar value accept, the proposal is binding on everyone, including those who voted against it.
The moment a Consumer Proposal is filed, a Stay of Proceedings takes effect. This is a federal legal order that immediately stops all collection activity. The CRA cannot garnish your wages, freeze your accounts, or contact you during the Stay. You make your agreed payments to the proposal administrator, and at the end of the term, the remaining balance is legally discharged.
CERB debt is unsecured government debt. It qualifies for inclusion in a Consumer Proposal. This makes a Consumer Proposal one of the most practical options available for Canadians dealing with CERB repayments alongside other debt. Learn more through our Consumer Proposal service page.
Bankruptcy
The Office of the Superintendent of Bankruptcy has confirmed that erroneous or overpaid CERB is a releasable debt in insolvency. This means CERB debt can be discharged through bankruptcy along with other unsecured debts. Bankruptcy is a more serious option with significant credit consequences and requires surrendering certain assets. For most people with CERB debt alongside manageable other debts, a Consumer Proposal is a less disruptive path to explore first.
Comparing Your Options for CERB Debt
| Option | Reduces the Debt? | Stops CRA Collection? | Legal Protection? | Credit Impact? |
|---|---|---|---|---|
| CRA Payment Arrangement | No | Pauses it | No | Minimal |
| Financial Hardship Review | Possible, not guaranteed | May pause it | No | None |
| Consumer Proposal | Yes | Yes (immediately) | Yes (Stay of Proceedings) | Yes (R7, 3 yrs after) |
| Bankruptcy | Yes (discharge) | Yes (immediately) | Yes (Stay of Proceedings) | Yes (R9, 6-7 yrs) |
Can a Consumer Proposal Include CERB Debt Along with Other Debts?
Yes. One of the most practical aspects of a Consumer Proposal is that it consolidates all of your unsecured debt into a single resolution. That means CERB repayments, credit card balances, personal loans, lines of credit, and other unsecured debts are all addressed together.
Rather than managing separate payment arrangements with the CRA, your credit card company, and your bank, one proposal covers everything. If you have more than one source of debt creating pressure, a Consumer Proposal may address all of it in a single process.
To understand how a Consumer Proposal works step by step, our article on what a Consumer Proposal is covers the essentials in plain language.
What If You Dispute Your CERB Repayment?
Some people receive CERB repayment notices for amounts they believe they were legitimately entitled to. If you believe the CRA has made an error, you have the right to object. You can request a review through the CRA’s objections process, and if that does not resolve it, you can appeal to the Tax Court of Canada.
Disputing the debt and managing the underlying financial pressure are two separate problems. You can pursue a dispute while also exploring options to manage the financial impact. Getting legal advice can help you understand how to do both.
How We Help
We are a debt law firm, not a credit counselling agency and not a Licensed Insolvency Trustee. Our legal duty is entirely to you. We help you understand every option available for your situation, represent your interests throughout the process, and make sure you are not pressured into a path that does not serve you.
If you are dealing with CERB debt alongside other financial pressure, we can walk through your full picture with you in a confidential consultation, at no cost. Learn more about our team on our About page.
Frequently Asked Questions
Is CERB repayment debt treated the same as regular tax debt by the CRA?
CERB debt is treated as CRA debt and is subject to the same collection powers, including wage garnishment and bank account seizures without a court order. One important difference is that the CRA does not charge interest on COVID-19 benefit debts, including CERB, the way it does on income tax arrears. The principal amount still needs to be repaid.
Will the CRA garnish my wages for CERB debt?
Yes, this is possible. The CRA has the authority to issue a Requirement to Pay directly to your employer without going to court. This can result in up to 50% of your net wages being redirected to the CRA. As of 2024, the CRA has been actively pursuing collection action against those who have not responded to repayment notices.
Can CERB debt be included in a Consumer Proposal?
Yes. CERB repayment debt is unsecured government debt and can be included in a Consumer Proposal under the Bankruptcy and Insolvency Act. The CRA becomes a creditor in the process and is bound by the outcome if the proposal is accepted by the majority of creditors by dollar value.
Does the CRA charge interest on CERB repayment debt?
No. The CRA has confirmed it does not charge interest on COVID-19 benefit debts, including CERB. The amount you owe is the principal repayment amount only. However, this does not change the CRA’s ability to pursue collection.
What if I can only afford to repay part of my CERB debt?
A CRA payment arrangement allows you to pay in installments, but it does not reduce the total amount owed. A Consumer Proposal is the legal mechanism that allows you to formally settle unsecured debt, including CERB, for a reduced amount over time. Whether this is appropriate for your situation depends on your overall financial picture, which is worth reviewing with a debt lawyer.
You Have Options. Let’s Find the Right One.
CERB debt does not have to define your financial future. We work with Canadians who are dealing with CRA debt alongside other financial pressure. A free, confidential consultation costs you nothing and tells you exactly where you stand.
