If you relied on the Canada Emergency Response Benefit (CERB) to make ends meet, you’re not alone. For months, CERB provided much-needed financial relief to Canadians affected by the COVID-19 pandemic. But now that the program has ended, many people are facing an uncertain financial future.
The government has expanded Employment Insurance (EI) and introduced the Canada Recovery Benefit (CRB) to help those still struggling. However, not everyone qualifies. According to the Canadian Centre for Policy Alternatives, approximately 2.7 million Canadians will receive less financial support than they did under CERB—and some won’t receive any at all.
So, what happens if your income no longer covers your expenses and debt payments?
The Financial Impact of CERB Ending
According to an analysis done by the Canadian Centre for Policy Alternatives, the transition away from CERB has left an estimated 2.7 million Canadians receiving reduced or no financial support, even as the pandemic continues to disrupt businesses and jobs. For many, the $2,000 monthly CERB payments were already challenging to live on, particularly for those with high debt loads. Now, the reduction or loss of these benefits has pushed debt management to the forefront for many households.
Options to Manage Debt After CERB Ends
For many, even with CERB, keeping up with financial obligations was challenging. Now, with reduced or no government support, managing debt may feel impossible. If you find yourself in this position, you do have options.
While you may not be able to increase your income, you may be able to reduce your debt to a level that fits your current financial situation. Consumer Proposals and Bankruptcies, the two formal debt relief options under Canada’s Bankruptcy and Insolvency Act, are designed to help Canadians find financial relief based on what they can afford to pay—not what creditors demand.
Option 1: A Consumer Proposal
A Consumer Proposal is a legal agreement to settle your unsecured debt for a reduced amount, repaid over a maximum of five years. This solution allows you to avoid bankruptcy while still eliminating a significant portion of your debt.
A Licensed Insolvency Trustee (LIT) will review your financial situation and help you propose an amount that’s fair to both you and your creditors. Given the impact of COVID-19 on jobs and incomes, creditors are often willing to accept a reduced repayment plan that reflects your new financial reality.
Key benefits of a Consumer Proposal:
- Reduce your debt to an amount you can afford
- Avoid bankruptcy
- Keep your assets, including your home and car
- Stop collection calls, wage garnishments, and lawsuits
- Make one manageable monthly payment
Option 2: Bankruptcy
If a Consumer Proposal is not feasible, bankruptcy provides a legal fresh start. Contrary to common misconceptions, filing for bankruptcy does not mean losing everything. In fact, most people who file bankruptcy keep their essential assets, including personal belongings, household furnishings, registered pensions, and—depending on your situation—your home and car.
The goal of bankruptcy is simple: to eliminate your unsecured debts and provide you with a fresh financial start. A first-time bankruptcy can be completed in as little as nine months.
Your required payments in bankruptcy are based on what you earn, not on how much you owe. Each year, the government sets guidelines for basic living expenses. If your income exceeds this amount, only half of the surplus goes toward your debts. If your income decreases—for example, if your government assistance ends or your work hours are reduced—your payments will decrease accordingly.
Key benefits of bankruptcy:
- Eliminate most, if not all, of your unsecured debt
- Stop collection calls, wage garnishments, and lawsuits
- Affordable payments based on your income, not your debt amount
- Receive financial counseling to rebuild your credit
The World Has Changed—Your Debt Can Too
The COVID-19 pandemic has reshaped the economy and affected millions of Canadians. The financial obligations that seemed manageable before may now be impossible to maintain. Fortunately, Canada’s financial laws recognize that circumstances change. That’s why legal solutions like Consumer Proposals and bankruptcies exist—to help people adjust their debts when life takes an unexpected turn.
If your financial situation has changed, your debt should change too. You don’t have to navigate this alone.
Speak to a Licensed Insolvency Trustee Today
Only Licensed Insolvency Trustees (LITs) are authorized to file Consumer Proposals and Bankruptcies. They are the most qualified professionals to help you find the right solution.
At L.C. Taylor Licensed Insolvency Trustees, we offer free, no-obligation consultations—either in person or by phone. We’ll review your financial situation and provide clear, honest advice about your best options.
Leigh C. Taylor, LIT
