Handling COVID-19-Related Debt Problems

Multiple waves of the COVID-19 virus have created an unprecedented health crisis for many Canadians. And for some of us, a debt crisis as well. The number of Canadians who have lost their jobs or their businesses is staggering. Other Canadians still employed have had their hours reduced or have been laid off, leading to the need for government emergency benefits such as the CERB (Canada Emergency Response Benefit) or the more-recent CRB (Canada Recovery Benefit) over the course of the pandemic. Unfortunately, those benefits, while helpful, were often not enough to pay all the bills. This shortfall in our budgets frequently led to an increased use of credit cards, loans and even payday loans to cover household expenses each month.

Making this situation even more dire for many is the sizeable number of Canadians who had little to no savings set aside prior to the start of the pandemic. Even many of those who had been able to follow the advice of financial experts and salted away savings prior to the health crisis had no choice but to use some, or all, of their savings to cover expenses.

So, as the COVID-19 pandemic continues, so do the debt pressures many of us continue to struggle with. Are there any strategies we can use to clear up this debt? Luckily, there are a few strategies we can explore to get back on track:

COVID-19 is a global issue that has affected every country on earth. As a result, many creditors have adjusted their policies temporarily to make it easier for people to handle their financial commitments. In some cases, financial institutions and other creditors have reached out to customers to explain the changes they have made. However, even if a creditor has not notified you of any policy changes, it is still worth reaching out to them if you are having trouble paying your bills.

If you explain your situation and clearly tell them that you are having difficulty making ends meet due to COVID-19, they may be willing to help you. In some cases, this could mean a temporary reduction or a waiving of interest charges, eliminating any late fees, giving you a bit more time to pay your debts or allowing you to skip some payments.

When you talk to your creditors, explain your situation clearly and make sure you know how much you can afford to pay them. This will help you recognize if what the creditor is offering will be of help to you.

If you can get any assistance from your creditors, make sure to get the updated plan in writing from them.

Strategy #2:  Explore Government Benefits

The federal government, as well as most provincial and territorial governments, have introduced many new benefits over the course of the pandemic. These were designed to help people cope with the financial instability caused by COVID-19. Over the last year, the available benefits have changed and some programs that were once available have either been modified or discontinued.

For example, the original CERB program offered $2,000 per month to eligible applicants. This has now been supplanted by the CRB program, which currently offers $300 per week, a considerable drop monthly from what CERB was providing. However, the program is available for up to 50 weeks (about 11 and a half months), which will take many Canadians needing it well into 2022.

If you are struggling financially, investigate what the federal government or your provincial government may be offering at this time and then apply for the programs for which you qualify. This could be the lifeline you need during this pandemic.

If you set up your budget prior to the COVID-19 pandemic and the fallout from this disease, it is a great idea to review it and adjust the categories and amounts, as necessary. There is a new financial reality to our world, so what made sense in 2019 or 2020 may no longer apply to your situation.

In addition to cutting spending where you can, you may want to review your financial goals as well. Those goals may need tweaking to bring them in line with any drop in your income or change in lifestyle or focus.

If you are unable to pay your bills or struggling with debt, you may want to look for ways to earn some additional income, even if it is only in the short-term. You could consider taking on freelance or contract work, doing some overtime (if you are still employed and if your company permits it), or even selling items that you no longer need on Kijiji or eBay. Some people are taking on gig economy work (such as Door Dash food delivery or Uber driving) to bring in supplemental income for the short term. Every little bit counts and the extra money you generate could help ease some of the financial stress of the pandemic for you.

There are several places to get professional financial assistance. However, it is important to do research before you work with any organization. Find out their qualifications, their fees, and how they can help you before you agree to anything. Some professionals, such as Farber’s Licensed Insolvency Trustees, offer a free consultation where we look at your financial situation and provide you with details on the options that can help you. If you feel you need help, please reach out to our team today by CLICKING ON THE FREE CONSULTATION BUTTON, below, or giving us a telephone call. We are here to help.