I returned all the cheques (2 in total) They were neve cashed and were shipped back to Social Services upon receiving
I answered that question "NO" because nothing was received
The cheques were never cashed and sent back to you?
That should have been something you looked into at the time.
What's the best possible solution in this situation now ?
I assume that you got some sort of notification that you were in default, as you sent cheques to cover the debt.
I would suggest that you contact social services, explain the situation and get details of any outstanding debt, make the payment and get a letter to prove that you are no longer in default.
Include a copy of the letter with your application and ask them to notify CIC.
Without clearing the debt you will not be allowed to sponsor.
The normal process in Ontario is:
Sometime after the applicant claims welfare, you would be notified by letter that you as the sponsor are in default of the (in your case, first) agreement. This is not immediate, it can take months.
You make an arrangement to pay in one lump sum or in part payments.
When the debt is finally paid, you are no longer in default of the sponsorship agreement. A letter is sent to you telling you that the debt is paid. Another letter is sent to CIC to confirm the same.
If you finish the sponsorship period with no other default and want to sponsor someone else, answer yes to IMM1344A Question 7; include a letter explaining what happened in the past and the letter that states you are no longer in default.
Then you will be allowed to sponsor (assuming no other issues exist to prevent this).