Finding Debt Help During the COVID-19 Pandemic

Posted on 15 April 2020

As the COVID-19 pandemic continues, the economic fallout has been hard hitting for Canadians despite federal and provincial actions to offer social assistance and business loans.

The first of our pandemic priorities is to stay home and save lives.Government mandated physical distancing (and other emergency measures put in place to curb the crisis) have caused 44 percent of Canadian households to lose work. Hourly restaurant workers and freelancers have experienced some of the greatest impacts – in March 2020 alone, over 800,000 food service jobs were lost in Canada and 1 in 10 restaurants closed their doors.

In these kinds of uncertain economic conditions, personal debt can quickly get out of control. And, while filing for bankruptcy is sometimes the best way to settle with creditors and restart your financial future, we have found that many clients prefer to explore their options first – of which there are a number!

All of us have a part to play in flattening the curve – which includes making sure we prepare ourselves financially for what is happening right now and also what may come. Here are some tips for managing your finances during these trying times. We will be updating this post as more information becomes available.

Emergency Benefits and Financial Priorities During the Pandemic

Like many Canadians right now, you are probably at home, possibly working remotely while your kids try to follow their teacher’s e-learning curriculum. Because of the coronavirus pandemic, there are no more lunch outings or nights at the movies.

That means you’re spending less, right?

Not necessarily.

Being at home, instead of work, means household lighting, heating/cooling, internet, and electricity (in general) are being used at least 8 extra hours per week day – which means increased utility bills at the end of the month – and your employer probably isn’t compensating you for the overhead costs of your home office.

Grocery bills are going up too, as evidenced by reports of price gouging that demonstrate, in part, the rising costs of basic necessities. Food delivery costs and inflation add to that too.

With emergency measures, job loss, and increased expenses becoming the ‘new normal’, Canadians are having to re-evaluate their financial priorities.

So has the government.

The following are some of the relief measures being provided to businesses and individuals to weather current economic hardships and help with day-to-day expenses:

  • Canada Emergency Response Benefit (CERB): A taxable benefit of $2,000 per month for up to 4 months to eligible workers who have lost their income due to COVID-19. Currently, the requirement is that you must have worked 0 hours in the two weeks prior to applying, however; this may change to extend coverage to those working less than 10 hours weekly (such as gig workers or contractors) due to the crisis.
  • No more 1-week waiting period for Employment Insurance (EI) sickness benefits: The Canadian government has waived the waiting period for those who have been quarantined due to coronavirus.
  • Increased Canada Child Benefit: A temporary increase has been approved for the Canada Child Benefit to cover the costs of child care and home-learning.
  • Reduced Minimum Withdrawals for RRIFs for 2020: The government has reduced the minimum withdrawal requirements for Registered Retirement Income Funds by 25 percent for 2020.
  • Suspended Repayment and Interest on Student Loans: Federal student loan payments and interest have been suspended automatically until September 2020.
  • Various Funds for Community Outreach Organizations: The government has approved millions of dollars in funding for immediate help to seniors, women’s shelters, food banks, First Nations communities, and youth during this time. Click here for a full list of organizations.

How to Manage Debt During the Crisis

While the initiatives implemented by the Canadian government will ease the short-term economic impacts of the pandemic on Canadians, these measures may not be enough for those already facing a debt crisis. Here are some actions you can take to manage your A debt crisis is breaking out in light of the coronavirus, hoarding, and inflated costs for basic necessities such as toilet priorities during this time.

  1. Create a new budget for extraordinary circumstances. Check out this guide to emergency budgeting.
  2. Cover food and medication costs first, these are your immediate needs. Read more about how to save money on groceries.
  3. Then pay the most important bills, like hydro, water, and internet, so you can stay safe and work from home.
  4. Contact your landlord or bank about a mortgage or rent deferral, and try to set up partial payments.
  5. Contact your bank about reducing your credit card interest rate, in case you can’t make minimum payments, and see what other offers they have in place to support their customers during these unprecedented times.

If you’re experiencing extreme financial hardship and are worried about repaying your debts, read the fine print on your agreements and see if there is a clause allowing the creditor to take money from your associated chequing account when you don’t make your payments on time. If there is, consider moving your cash to a different bank. This will prevent unexpected withdrawals and gives you a temporary buffer of time to negotiate a workable arrangement with your credit card lender.

Note: Moving your cash is not a permanent solution. If you do not work out an agreement with your creditors and continue to miss payments, collection agencies will eventually contact you and wage garnishment orders can be enforced – no matter which bank your cash is in.

One way to avoid this situation altogether is to talk to a Licensed Insolvency Trustee about consolidating your debts with a consumer proposal.

How a Consumer Proposal Can Help with Consolidating Debts

Unfortunately, the costs of living don’t stop coming due – even when the country is in lock down. Consolidating your debts can provide financial relief amidst the ongoing COVID-19 crisis, so that you can stay focused on the top priorities: health, safety, and making sure that you and your family have enough food and shelter.

As bills pile up while income is stunted or reduced, it may be harder to Consolidating debts with a consumer proposal can allow to minimize your creditor expenses and take care of your most essential needs (food and shelter) during nation-wide lockdowns. balance financial priorities now (even for people who have been very organized and on time with their payments in the past) and creditors are still reporting missed payments to collection agencies, though the calls might not start coming in right away.

A Licensed Insolvency Trustee (LIT) has the power to freeze interest and penalties. They also have the authority to put a stop to collection calls – immediately. In a time when staying healthy is more important than ever, you don’t need additional stress from angry creditors and harassing collections callers.

By signing a consumer proposal, you streamline all of your debt repayment obligations into single monthly payments and, unlike in a bankruptcy, you get to keep your assets while paying back creditors a portion of what you owe.

LITs are the only professionals licensed by the government to administer proposals, which may be a useful tool for many Canadians in need of protecting their assets while navigating these uncertain times.

Licensed Insolvency Trustee Advice for COVID-19 Financial Hardships

A consumer proposal is just one way to manage debt during the COVID-19 pandemic.

If you’re struggling financially and need help consolidating debts (or simply want to explore strategies that may best serve your unique financial situation), you can speak to a Spergel Licensed Insolvency Trustee from the comfort and safety of your home in the following ways:

Or contact us to find the trustee nearest you.

Our commitment to you during lock-downs: Our LITs have been and will continue working remotely and provide all consultation and counseling sessions virtually for the safety of our staff and clients, while also ensuring our standards of client confidentiality and care continue to be maintained.

Helpful starting information:

What to Bring to an Appointment

To get the debt help that you need, please bring a list of who you owe and how much to each, a list of everything you own and your monthly household budget. Don’t have everything right away? Don’t worry – We will guide you through each step.

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Your Information

We’ll walk you through our application process. But, if you want to prepare for your debt free assessment consultation in advance, download our information form and fill in what you can.

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Calculate Your Debt Repayment Options

How can you compare your debt repayment options if you don’t know how much they will cost you? Your solution will become much clearer when you are able to compare costs.

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Ready to Be Debt-Free?

If you’re ready to be debt free, it’s time to meet with one of our knowledgeable Licensed Insolvency Trustees at your convenience and get started

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