Why it’s hard for some Canadians to repay their CERB

As Canadians receive notices that they were not eligible for some or all of the Canadian emergency response benefits they received at the start of the pandemic, CERB advocates and recipients wonder why the federal government chose the middle of an affordability crisis to get help.

Caught between skyrocketing inflation and the prospect of a possible recession, notices of debt (NoD) and notices of repayment (NoR) could disadvantage low-income Canadians as the costs mount, experts say. Some facing reimbursement have expressed frustration, telling the Star they want to know why they are now facing mounting bills as daily costs rise.

“Now is just not the right time,” said Emma Stepus, a CERB recipient and mother of two, who lost her job at a bridal shop as COVID-19[feminine] spread across the country in early 2020.

“There just isn’t much left over each month, and certainly not enough to pay off a $2,000 debt that I didn’t even know I had,” Stepus added.

The cost of reimbursement has a disproportionate impact on low-income people who may still face poor economic circumstances, said Leila Sarangi, director of social action at Family Service Toronto. Alongside a CERB amnesty task force, Sarangi is asking for a reimbursement discount for people in the lowest income brackets who cannot afford the extra expenses.

“We’re talking about individuals and families who never had financial resilience,” Sarangi said, adding that many people don’t have a savings account to withdraw the money. Some people Sarangi spoke to turned to existing lines of credit to pay for expenses and fell further into debt; others have approached their place of worship to ask for funding.

CERB has offered a lifeline to low-income Canadians of all ages, Sarangi said. Monthly payments didn’t fill bank accounts, she adds: the stipend paid for supplies so children could study from home, and food or rent payments for people who couldn’t afford it. .

According Data available from Statistics Canada, 36.3% of women received the CERB compared to 34.2% of men. Workers who are visible minorities were more likely to receive the funding, accounting for 41% of recipients, with women and youth who are visible minorities being slightly more likely to have applied for the benefits.

Together, CERB recipients represent about one-third of the working population over the age of 15 who earn $5,000 or more a year.

The Canada Revenue Agency, for its part, said it understands that some may have difficulty repaying and is “committed to supporting Canadians in these difficult times.”

In a statement, an CRA spokesperson said those unable to repay may be able to defer. “We will assess their situation and may defer payment. We would then follow up at a later date to reassess their situation, the spokesperson said.

This option exists for people facing financial hardship, i.e. those who would be deprived of basic necessities such as food, clothing, shelter, medical care or utilities if they had to pay, a said the CRA.

The agency does not appear to have standardized what hardship means, writing instead that “the existence of financial hardship and the individual’s ability to pay are determined on a case-by-case basis, considering the individual’s particular circumstances.”

Just one more million Canadians recently received a NoD.

The Star spoke to three CERB recipients to find out what the refund means for them. Their responses paint a grim picture of what new debt could mean for people trying to navigate life in a costlier post-lockdown Canada.

Among those currently considering the refund is Matias Wharton-Mery, who dreads the possibility that it means giving back all of the CERB he collected in 2020, when he was on the program for five months. Wharton-Mery was notified last week that he owed money to the Canada Revenue Agency, but is still awaiting an update on the specific amount.

“It would be a big chunk of money for me,” Wharton-Mery said, adding that the payments he received helped him get through the last year of his schooling. After months of pandemic-triggered unemployment, Wharton-Mery has finally found her way back to work. For a time, he lived paycheck to paycheck, he says.

At this time, Wharton-Mery’s eating habits suffered. He had to buy cheaper food, he says, which was often less healthy and left him feeling unwell after certain meals.

He said he was frustrated because everyone was encouraged to apply for CERB when the program was introduced. “It doesn’t feel good for (the government) to say they are here to support us,” but turn around once life is back to normal and ask for everything in return, he says.

Reimbursement will likely mean Wharton-Mery has less money for emergencies, like a car breakdown, he adds.

Emily Dorey agrees with her frustration. “It’s just not fair, especially when the government has encouraged people to apply if they need to,” she said. Although Dorey had already paid off the $1,000 she owed, she had to dip into her student loan to cover the expenses, reversing the progress she had made on her existing debt.

“I certainly expected to be taxed on it, but I didn’t expect to have to pay it back in full,” Dorey said, adding that if she had known in advance that she would be faced with this situation, she would have may have chosen a different path or would not have applied it. at all.

Since the pandemic has severely limited her income, Dorey was watching her credit card and student loan debt. Dorey says she felt hopeless about her situation and asked for CERB, believing she was qualified for assistance.

“All the compassion that people who were struggling at the start of the pandemic received is just not there anymore,” she said.

Then there’s Emma Stepus, the mother of two who lost her job at a bridal shop. During the two months she was out of work, she made the same choice as Dorey and Wharton-Mery and applied to CERB.

The extra money helped Stepus spend his time at home with his family. Now she’s on the hook for $2,000, but says it would be hard to start paying off that debt.

To her, the refund request seems “unfair”, she said.

The federal government is wrong to add a new layer of stress on people who are already struggling with increased spending due to rising inflation, she said.

Jenna Moon is a Toronto-based business journalist specializing in personal finance and affordability. Follow her on Twitter: @_jennamoon

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