Business Bankruptcy in Canada is primarily governed by the Bankruptcy and Insolvency Act (BIA), a…
Are you afraid you might lose your job? The thought of being unemployed is scary at the best of times. The fear becomes even worse when economic conditions are uncertain as they are now. You may have enough savings to cover your expenses for a while if you lose your job, or you may not.
If your employer lays you off, there are some safety nets you could qualify for. Employment Insurance (EI) is available, as long as you qualify. However, it only covers a maximum of 55% of your pay. As a result, you could be unable to pay your bills and debts. But what happens if you file for Bankruptcy while collecting Employment Insurance? Can your creditors lay claim to your Employment Insurance payments?
Being unemployed is challenging for most people. Your living costs and debt repayments continue. Sometimes your living costs increase when you’re not working. You might also have additional expenses when looking for a job, treating a medical condition or child care.
Employment Insurance is a government financial support program that provides time-limited help if you lose your job. Service Canada administers the program. EI offers many types of benefits if you’re unemployed due to certain circumstances. The most common are job loss, sickness, and maternity leave. You must comply with the EI rules in the Employment Insurance Act to receive your EI payments. The Act contains guidelines which vary depending on your situation.
EI regular benefits
EI regular benefits will apply to you if you lose your job through no fault of your own. You can apply if you’ve worked the minimum required hours within the last 52 or 104 weeks. The number of hours needed to qualify depends on where you live. EI benefits can be as short as 14 weeks or as long as 45 weeks.
You can receive up to 55% of your average weekly earnings that are insurable. The maximum you can receive weekly is $650 because the maximum insurable amount for EI is $61,500 in 2023.
Services Canada will need your Record of Employment (ROE) before they approve your benefits. Your employer submits the ROE directly to Services Canada when your employment is terminated.
EI sickness benefits
Sometimes health issues will make going to work difficult or impossible. You can apply for EI sickness benefits if you are ill or injured. Claims made after December 18, 2022, can be approved for up to 26 weeks of EI payments. The maximum payment is the same as the regular benefits – 55% of your weekly average insurable up to $650.
You need a medical certificate stating why you are unable to work. In addition, the medical certificate must give an approximate timeline stating when you can return to work.
EI for maternity and parental leave
If you are pregnant, have recently given birth or adopted a child, you could be eligible for maternity or parental benefits. EI will pay maternity benefits for up to 15 weeks. The maximum you can receive is 55% of your average weekly insurable wage, up to $650.
You can apply for standard parental benefits if you have a newborn or newly adopted child. You can share this benefit with the other parent and receive up to 40 weeks of EI payments. If you claim the full benefit, you’re entitled to 35 weeks of standard parental leave. Your EI payment while on standard parental leave can be a maximum of $650 weekly.
Extended parental leave lasts for up to 18 months or 69 weeks. Like standard parental benefits, you can share extended parental leave with the other parent. One parent can claim a maximum of 61 weeks of benefits. Extended parental benefits pay up to 33% of average insurable earnings to a maximum of $390 weekly.
When receiving EI benefits, you must complete a report every two weeks. You can fill out your report online or over the phone. You can request an exemption from the bi-weekly reporting requirement, depending on your circumstances. Keeping up to date with your EI reporting ensures there will be no interruptions to your benefits.
Living on 55% of your income can be challenging and stressful. You may have other benefits you could claim if you are out of work or unable to work::
- Severance pay if your employer lays you off.
- Disability benefits through your employer if you’re off work for health reasons.
- Disability, critical illness, or job loss insurance on your debts such as your credit cards, loans or mortgages.
It’s essential to look at all your options so you don’t miss out on any income you should receive.
Wage Earner Protection Program (WEPP)
Businesses can end up in Bankruptcy just like individuals can. If this happens to your employer, you could be out of a job. Your employer might owe you severance, vacation pay, wages, commissions, or termination pay.
The Wage Earner Protection Program is a program the Government of Canada offers to workers who have lost their job and are owed money from their employer but whose employer is in receivership or Bankruptcy.
To be considered for the WEPP, you need to apply. If approved, you can receive up to seven weeks of insurable wages.
Employment insurance and Bankruptcy
Your creditors cannot seize your Employment Insurance income if you file for Bankruptcy. They can’t take your Canada Pension Plan payments either if you’re receiving that in addition to EI. Filing for Bankruptcy will stop all collection calls and legal action and get you out from under your burden of debt. Not having to manage your debt when you’re short on income can be an enormous stress relief.
What if it’s not Enough?
These support programs are helpful, but you may need more money than you receive to pay your living expenses and debts. If your income from Employment Insurance and any other benefits still leaves you short to pay your debts, help is available.
Our Licensed Insolvency Trustees at Adamson and Associates will work with you to help you manage or eliminate your debt. We provide credit counselling, Consumer Proposals and Bankruptcy as debt relief options. You don’t have to struggle alone. Call us today for a free consultation at 519-310-5646 so you can start fresh.