Lost Your Job in Canada? Here's What to Pay First

You just lost your job. Your phone is buzzing with HR emails, your severance letter has numbers you need to decode, and every creditor you owe money to is still expecting payment on the first of the month.

Here is the priority order. This is not opinion — it is based on Canadian insolvency law, EI rules, and the collection timelines that actually govern what happens to your money.

Step 1: Apply for Employment Insurance (Days 1–3)

Do this first. Before you update your resume. Before you call your bank. Before you do anything else.

Why urgency matters: You lose one week of benefits for every week you delay past your last day of work. If you wait 6 weeks, you lose 2 weeks of benefits permanently. At $2,400/month EI, that is $1,200 you will never recover.

How to apply:

• Go to Service Canada’s EI application
• You need your Record of Employment (ROE) — your employer must issue it within 5 days of your last day
• You can start the application before receiving your ROE

What you will receive:

• 55% of your average insurable earnings, up to approximately $3,350/month (2026 maximum)
• Most manufacturing workers: $2,100–$2,400/month
• Most federal/professional workers: $2,500–$3,000/month
• Duration: 14–45 weeks depending on regional unemployment and your hours worked

March 2026 update for tariff-impacted workers: Ottawa extended temporary EI measures including a waiting-period waiver and modified treatment of separation pay. If your layoff is related to US tariffs (manufacturing, steel, auto parts), you may qualify for faster and longer support.

Step 2: Calculate Your Severance Runway (Days 1–3)

Take your after-tax severance. Divide it by your monthly essential expenses. That number is your survival window.

Example:

Now compare that to the average reemployment timeline in your sector:

• Manufacturing: 9–12 months at 70–80% prior income
• Federal public service: 6–12 months (longer for specialized roles)
• Sales and service: 3–6 months but often at lower pay
• Tech/professional: 4–8 months

If your runway is shorter than your reemployment timeline, you have a math problem that budgeting alone cannot solve. Keep reading.

Step 3: Pay Shelter First — Always

Rent or mortgage payments are priority one. Full stop.

Missing rent triggers eviction proceedings. Missing mortgage payments triggers power of sale or foreclosure after 90 days, and you lose control of the timeline and potentially your equity.

If your mortgage is renewing in 2026 and your payment is jumping, contact your lender before you miss a payment. The FCAC Mortgage Charter requires federally regulated lenders to provide tailored support including amortization extensions and payment deferrals. But they only help if you ask before you are in arrears.

If shelter costs are unaffordable even on EI plus severance:

• Request mortgage payment deferral (3–6 months, interest accrues)
• Request amortization extension (25 → 30 years, saves $300–$400/month)
• If neither works, read sell before power of sale to protect equity

Step 4: Pay Secured Debts Second

After shelter, keep these current:

• Car payment — if you need the vehicle to find work or get to interviews
• Car insurance — driving uninsured creates criminal liability
• Utilities — disconnection takes weeks to reverse
• Home insurance — required by your mortgage lender

These are all secured debts or essential services. Missing them creates cascading problems that make your situation worse.

Step 5: Assess Your CRA Exposure

This is where most people make a critical mistake. They pay credit cards before addressing CRA debt. That is backwards.

The Canada Revenue Agency garnishes faster and harder than any private creditor. CRA does not need a court order to:

• Garnish your wages (up to 50% of employment income, 100% of contract income)
• Freeze your bank account — including the account where your severance just landed
• Intercept your tax refund
• Register a lien against your home

If you owe CRA money — income tax, HST, CERB repayment, anything — and you just received a severance lump sum, CRA can freeze that bank account the day the money arrives.

What to do:

• If you owe CRA less than $5,000: call CRA and set up a payment arrangement before they act
• If you owe CRA more than $5,000: consult a Licensed Insolvency Trustee immediately — a consumer proposal stops CRA collection including bank freezes and garnishment
• If you have outstanding CERB debt: CRA is actively collecting these in 2026 — do not ignore the letters

Step 6: Unsecured Debt — The Decision Point

Here is where the priority order becomes a decision tree.

Your unsecured debts include: credit cards, lines of credit, personal loans, payday loans, medical bills, and most CRA debt.

If your unsecured debt minimums are less than $300/month

You can probably manage on EI plus severance. Keep paying minimums, focus on the job search, and reassess monthly. Calculate your debt-to-income ratio to be sure.

If your unsecured debt minimums are $300–$600/month

You are in the danger zone. At $400/month in minimums on a $2,400/month EI income, that is 17% of your gross income going to credit cards that charge 20% interest. You are running on a treadmill.

This is the moment to book a free consultation with a Licensed Insolvency Trustee. Not to file. To understand your options before the math gets worse.

If your unsecured debt minimums exceed $600/month

Stop paying your credit cards. Seriously.

Here is why: every dollar you send to credit card companies while unemployed is a dollar of severance that should be covering rent and food. Those same credit card companies will accept 20–40 cents on the dollar through a consumer proposal. You are paying $1 for something they will take $0.30 for.

The collection consequences of not paying (calls, letters, credit score impact) take months to escalate into garnishment. Filing a consumer proposal before a judgment is obtained stops everything.

The math:

That $5,500 is 3 months of groceries for a family of four in 2026.

Step 7: The 7-Day Severance Protection Window

If you are going to file a consumer proposal, timing matters enormously.

Filing a consumer proposal triggers a stay of proceedings — a legal order that immediately stops:

• All collection calls
• All lawsuits
• All wage garnishment
• All CRA bank freezes and garnishments
• Seizure of your severance

If you file before your severance is paid, that money is protected. If you file after your severance is deposited and a creditor already has a judgment, they can garnish your bank account before the stay takes effect.

The ideal timeline:

For the complete emergency protocol with hour-by-hour instructions, see the Job Loss Debt Protocol 2026.

When to Call a Licensed Insolvency Trustee

Call this week if any of these apply:

• ☐ Unsecured debt exceeds $15,000
• ☐ Monthly minimums exceed $400
• ☐ You owe CRA money (tax, CERB, HST)
• ☐ Creditors are already calling or threatening garnishment
• ☐ Your severance runway is shorter than your realistic reemployment timeline
• ☐ You are renewing a mortgage in 2026 with a payment increase you cannot absorb on EI
• ☐ You scored 7+ on the 2026 crisis risk assessment

The consultation is free. No obligation. No credit check. The trustee will model your options — consumer proposal, bankruptcy, or continuing as-is — and you decide.

140,457 Canadians filed for debt relief in 2025. That is 385 per day. The highest number since 2009. You are not the first person to sit across from a trustee after a layoff, and you will not be the last.

The Decision Tree

JUST LOST YOUR JOB
│
├── Unsecured debt < $10,000?
│   ├── YES → Pay minimums, focus on job search
│   └── NO ↓
│
├── Can you sustain minimums on EI for 12 months?
│   ├── YES → Monitor monthly, reassess if income drops further
│   └── NO ↓
│
├── Do you own a home with equity?
│   ├── YES → Consumer proposal (protects 100% of equity)
│   │         → See: /solutions/consumer-proposal/
│   └── NO ↓
│
├── Is total unsecured debt < $250,000?
│   ├── YES → Consumer proposal (keeps assets, 60-80% debt reduction)
│   └── NO → Division I Proposal or bankruptcy
│              → See: /solutions/bankruptcy/
│
└── In all cases:
    → Apply for EI immediately
    → Protect severance by filing before it's paid
    → Use /calculators/consumer-proposal/ to model payments

Bottom Line

The order is: EI first. Shelter second. Secured debts third. CRA fourth. Credit cards last — and only if you can actually afford them.

If you cannot afford your unsecured debt minimums on EI income, stop paying them. Every dollar you send to credit card companies while unemployed is a dollar your family needs for rent and food. Those creditors will accept 20–40 cents on the dollar through a proposal. Do not pay a dollar for what costs thirty cents.

The consumer proposal calculator takes 2 minutes. The quiz takes the same. The consultation is free. The only thing that costs money is waiting.

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Sources:

• Statistics Canada, Labour Force Survey, February 2026
• CAIRP, Q4 2025 Canadian Insolvency Statistics (February 9, 2026)
• Service Canada, Employment Insurance eligibility and benefit rates
• Canada Revenue Agency, collections and garnishment authorities
• Bankruptcy and Insolvency Act (R.S.C., 1985, c. B-3), Sections 66.11–66.4, 67, 69
• Government of Canada, EI temporary measures extension (March 2026)