employment insurance (EI)

Will Bankruptcy Affect Your Employment Insurance (EI) Income?

The world, and many of the world’s economies, including Canada’s, are in uncertain times. Inflation is upon us, interest rates have been rising, war and rumors of wars dominate the media. The energy security that most countries previously took for granted has now become a question. The vast majority of economists are predicting a deep recession for the economy. During a recession, many people lose their jobs and will turn to employment insurance for monthly income. If you have too much debt to pay with a reduced income you will have a problem. Will bankruptcy affect your employment insurance (EI) income?

Both are Federal Programs

The most powerful programs to gain relief from your debts are a result of Canadian Federal Government law recognizing that people need help when they are in a tough spot. The filing of either a Consumer Proposal or a Bankruptcy creates an immediate stay of proceedings which stops collection action. Once registered, both of these filings usually result in complete relief from your unsecured debts. The Canadian Federal Government only allows Licensed Insolvency Trustees (that’s us!) to file and administer these programs.

The Federal Government is also responsible for administering the Employment Insurance (EI) system. If you have enough employment hours, and have been laid off from your job, a person will often qualify for $2,000 per month or more of EI. To qualify, you are required to make an EI application and comply with their EI reporting requirements. These requirements are set out in the Employment Insurance Act.

You may also qualify for EI if you have recently welcomed a child into your family and qualify for maternity benefits or paternity benefits or you are ill and need to take a temporary leave from your work for medical reasons.

Since all of these programs are Federal Government programs, will the filing of a Bankruptcy cause you to lose your EI benefits?

Thankfully, the answer is NO. A person’s employment insurance benefits will not be interrupted by the filing of a Bankruptcy or a Consumer Proposal.

Other Types of Insurance

In addition to Employment Insurance, there are other types of insurance programs to be aware of when your income is interrupted. These would include:

  • Loan protection insurance
  • Critical illness insurance
  • Job loss insurance
  • Medical insurance

These insurance products may have been sold to you when you originally took out a loan. To see if you qualify you would need to review your original loan documentation or contact the creditor.

In our experience, we have heard that these types of insurance products are difficult to collect from. However, it is worth a try.

Will a Bankruptcy Filing Affect Your CPP and OAS Pensions?

Dealing with the rising cost of living is no joke when you are on a fixed pension income. Many seniors rely on income from a combination of Canada Pension Plan, Old Age Security, and possibly the Guaranteed Income Supplement. All of these pension programs are administered by a part of the Federal Government. It would be horrible for a person to suddenly lose them.

If rising rents and higher food prices push a senior into too much debt they may need the relief that a Bankruptcy filing would provide.

Fortunately, much like employment insurance, filing for Bankruptcy protection will not cause you to lose your pensions.

Pro tip: file your personal tax return each year to ensure there is no interruption to your pensions and so you can continue to receive your quarterly GST credits.

Contact Us – We are Here to Help!

Sometimes you can see the writing on the wall and you just know that you won’t be able to pay your debts, especially if you lose your job. It is best to take action sooner rather than later.

At Derek L. Chase & Associates, we offer a free initial assessment where we will analyze your finances and provide you with information on what options are available to you. This appointment is confidential and non judgemental.

As an independent firm, we have the flexibility to take as much time as you need to have all of your questions answered without any pressure.

Filing a Consumer Proposal or a Bankruptcy in Canada is designed to provide the honest but unfortunate person a fresh financial start. Contact us to set up your appointment today and regain control of your financial future!

Derek L. Chase, CPA, CA, LIT

Being able to offer debt help assistance to individuals and corporations on a more intimate basis was a driving force in completing a “second CPA” by becoming licensed by the Federal Government as a Licensed Insolvency Trustee (previously Trustee in Bankruptcy) in 1997. It is extremely satisfying to be able to witness lives change for the positive due to a restructuring of financial affairs.



We remain open for business and are fully operational. Offices are open for appointments only, however we are available to serve you remotely. Please contact us to discuss your options during this challenging time.
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