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Canadian Payback Fund

22 January 2023

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Key Points

The Canadian Payback Fund is, perhaps, one of the most Googled topics when it comes to Canadian debt funding – but what is it? Do you pay into it or does it pay you? Is it a private or a business fund? How do you become eligible to use it and what are the terms and conditions of it? What is a CEBA loan?

Let’s take a look.

Government grants to pay off debts?

Many Canadians are under the impression that there is a government body that will give them a free grant in order to pay off their debts. Is this true? Due to the sheer volume of people searching for it, surely there must be something to it?

Unfortunately, not really – the government won’t give you free money to pay off your debts, but don’t be despondent. There are government-approved schemes to help you get out of debt.

What help is available, then?

There are numerous government-approved methods of tackling your outstanding debt, both for secured and unsecured debt personal debt and for corporate debt. These include:

Debt consolidation – applying for one loan to pay off all your other existing debts, condensing them into one manageable payment.

Debt settlement – Paying your debts off in full, though this could actually work against you rather than for you. 

Consumer proposal – Reducing your debts by as much as 80% by negotiating with your creditors to accept a lower payment from you.

Bankruptcy – The most serious solution. This will affect your credit score for a number of years but it will also clear your debts.

Corporate bankruptcy – The business version of personal bankruptcy. This is a complex solution and you will need professional representation. 

Corporate insolvency – If your business is unable to pay its debts you could potentially sell assets to keep the business afloat and pay off your creditors.

For more information on any of these solutions, please contact the Insolvency Trustee specialists at Harris & Partners at 1-800-268-8093.

Read our guide – What is a Credit Score in Canada?

CEBA loans

The Canada Emergency Business Account (CEBA) offered small businesses and not-for-profit organizations up to $60,000 in interest-free loans during the COVID-19 pandemic. CEBA provided $49 billion to Canadian businesses over a 14-month period before applications closed on June 30, 2021.

Until very recently, almost 900,000 CEBA loans had to be repaid by 31st December 2022, but many small businesses have been given the boost of an additional 12-months grace period to make their repayments. In even better news, eligible businesses who borrowed from CEBA could have as much as 33% (or $20,000) of the debt nullified if they pay their loan back by December 31st, 2023.

So, although this type of funding is no longer available to new applicants, existing loan recipients have a little more time to pay it back than they originally had which will be a welcome relief given the current global economic downturn.

Are there any types of debt that can’t be written off or consolidated?

This sometimes depends on the province that you live in as each one has its own unique rules and regulations, especially when it comes to bankruptcy proceedings. Typically, however, the following types of debts will not be forgiven wherever you file for bankruptcy in Canada:

  • Alimony
  • Child support payments
  • Court-imposed fines and penalties such as parking and speeding tickets
  • Debts that have arisen as a result of fraud
  • Restitution orders
  • Student loans if you have not been out of school for 7 years.

Need help with paying back your debts?

Speak to the Insolvency Trustees at Harris & Partners. Although the Canadian Payback Fund may not be able to help, we can. We’ve got over half a century of experience in helping Canadians to restructure or write off their debt. Your initial appointment with our expert Trustees is completely free, so don’t spend another moment worrying about unmanageable debts – get in touch with Harris & Partners – the debt management company you can trust