Dealing with CRA Collection Letters for CERB Ineligibility or Overpayment

The COVID-19 pandemic brought forth an unprecedented economic crisis, leading to significant income loss for numerous Canadians. In response, the government introduced the Canada Emergency Response Benefit (CERB), a temporary relief program intended to provide financial assistance. However, the quick launch of the program, coupled with its complex eligibility criteria, led to some Canadians receiving benefits they were not eligible for. These individuals are now facing the daunting task of repaying these benefits, as evidenced by the collection letters they’ve received from the Canada Revenue Agency (CRA). As a result, many are left wondering, “CRA Collection Letters for CERB Ineligibility or Overpayment. Can You File Bankruptcy?” This article delves into this issue, exploring the various options available for those struggling to repay their CERB benefits.

Understanding CERB and the CRA’s Role

The Canada Emergency Response Benefit (CERB) was a government aid program designed to provide financial support to Canadians whose employment was directly impacted by the COVID-19 pandemic. CERB offered $2,000 every four weeks to eligible recipients, with some alterations later allowing Canadians to receive benefits through Employment Insurance or the Canada Recovery Benefit.

However, in the haste to provide financial relief, some Canadians ended up receiving CERB payments erroneously. This could have occurred due to a misunderstanding of the eligibility criteria, accidental double payments from both the CRA and Service Canada, or an overestimation of future income. As a result, the CRA, which collects overpayments on behalf of Service Canada, has started issuing collection letters to recipients deemed ineligible for the benefits they received.

Why Are Canadians Receiving CRA Collection Letters for CERB?

The primary reasons Canadians are receiving collection letters from the CRA are due to double payments and income ineligibility.

Double Payments

When the program was first rolled out, Canadians could apply for CERB benefits through either the CRA or Service Canada, but not both. Unfortunately, due to confusion surrounding the application process, some individuals ended up applying through both portals and thus received double payments. The CRA is now demanding repayment from these individuals.

Income Eligibility

The CERB program stipulated that to be eligible, an applicant must have earned at least $5,000 in employment or self-employment income in 2019 or the 12 months prior to the application. However, due to confusion over what constitutes eligible income, some recipients who did not meet these criteria still received payments. These individuals are now receiving CRA collection letters demanding repayment.

What Happens If You Can’t Afford to Repay CERB?

Given the ongoing economic uncertainty, many Canadians are finding it difficult to repay their CERB overpayments. If you’re unable to afford the full repayment, the CRA recommends contacting them to arrange a more manageable repayment plan.

However, if you fail to communicate with the CRA or adhere to the arranged plan, they may take legal action. The CRA’s collection powers are far-reaching and include measures such as wage garnishment, bank account freezing, lien registration against your assets, and withholding future tax refunds or credits.

For those unable to repay their CERB debt, a question arises – “CRA Collection Letters for CERB Ineligibility or Overpayment. Can You File Bankruptcy?”

Can You File Bankruptcy If You Can’t Afford to Repay CERB?

Filing for bankruptcy is a serious decision with long-lasting effects on your financial future. However, in some cases, it can provide a way out of overwhelming debt.

Recently, the government and the Office of the Superintendent of Bankruptcy (OSB) confirmed that CERB overpayments might be discharged through bankruptcy, provided they arose due to overpayments or income ineligibility. This means that if you cannot afford to repay your CERB benefits due to overpayments or eligibility errors, you can include these debts in a bankruptcy filing.

However, it’s crucial to remember that filing for bankruptcy should be a last resort, only considered after thoroughly exploring all other possible options.

Other Options for Repaying CERB Debt

If bankruptcy seems too drastic or doesn’t suit your situation, there are other options available for dealing with CERB debt.

Negotiating a Payment Plan with the CRA

If you’re unable to repay your CERB debt in full, reaching out to the CRA to negotiate a payment plan can be a viable option. This approach allows you to make smaller, more manageable monthly payments over an extended period.

Debt Consolidation

For those with multiple debts, including CERB overpayments, a consolidation loan might be worth considering. This option allows you to combine all your debts into a single loan, which you then repay according to pre-arranged terms with your financial institution.

Filing a Consumer Proposal

A consumer proposal is a legal agreement arranged by a Licensed Insolvency Trustee between you and your creditors to repay a portion of your debts. This option allows you to keep your assets and reduce your debt significantly, offering a fresh financial start.


Receiving a CRA collection letter for CERB ineligibility or overpayment can be a stressful experience, especially if you’re unable to repay the debt. However, like all debts, it’s crucial to address the issue promptly and explore all available options.

Whether it’s negotiating a payment plan with the CRA, consolidating your debts, filing a consumer proposal, or considering bankruptcy as a last resort, there are options available to help manage your CERB debt. By taking the right steps and seeking professional advice, you can navigate this challenging situation and work towards regaining your financial stability.

Remember, if you’re struggling with the question, “CRA Collection Letters for CERB Ineligibility or Overpayment. Can You File Bankruptcy?” it may be time to reach out to a financial advisor or a Licensed Insolvency Trustee. They can provide invaluable guidance, helping you make an informed decision that aligns with your financial situation and future goals.

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

Discuss options to get out of debt with a trained & licensed debt relief professional.