Can Employment Insurance (EI) Overpayments Be Erased?

An employment insurance (“EI”) overpayment occurs when Service Canada believes that you received EI benefits that you were not entitled to.

Are EI overpayments released by bankruptcy or a consumer proposal?  The answer is finally clear thanks to the court’s 2021 decision in Stoddard (re), 2021 NSSC 81.

EI overpayments are not released in accordance with section 178 of the Bankruptcy and Insolvency Act states, but the Court notes that Service Canada does not take any action to collect these EI overpayments after an individual completes a bankruptcy or consumer proposal, so while the debt technically survives either process, it is quite unlikely that the government will take any action to collect it.

Section 178 of the Bankruptcy and Insolvency Act lists debts that are not discharged by a bankruptcy or consumer proposal.  One of these non-dischargeable debts is “any debt or liability resulting from obtaining property or services by false pretences or fraudulent misrepresentation, other than a debt or liability that arises from an equity claim“.  While many EI overpayments are often the result of a simple misunderstandings, Service Canada may consider them the result of an individual fraudulently misrepresenting their employment or income level in order to receive EI benefits that they are not entitled to.

If your debt is weighing on you, then give us a call to have your situation reviewed by a Licensed Insolvency Trustee for free.  We have 21 convenient locations and never charge up front fees.  Give us a call, or fill out our contact form and let us impress you with our prompt response.