debt during pandemic

Managing Debt During the Pandemic

As a Licensed Insolvency Trustee, we are uniquely equipped to communicate with individuals and businesses that are under financial stress. Each day we provide financial counselling and advise people how to acquire help with their debts. After helping thousands of people obtain a fresh start, we understand the best practices for how to deal with debt during a crisis. Obtaining good debt help advice from a debt expert such as a Licensed Insolvency Trustee is critical if you are facing more debt than you can handle.

Canadians were already carrying a tremendous debt load prior to the Coronavirus but now there are even more financial challenges, mainly due to disruptions in cash flow.  Regardless of where you are hunkered down, we here at Chase & Associates would like to offer some debt advice if you are currently facing financial hardship because of this macroeconomic event which is impacting everyone. Here are a few things to consider:

Avoid the Urge to Splurge

It might take us quite some time to get the image of bulk toilet paper buying out of our minds. Financially speaking, this type of panic buying does not serve you well as you will overspend. In addition, socially speaking, we need to share what is available and the government is confident that the supply chain is in good shape.

It also is not recommended to panic sell your assets. For instance, cashing out an investment when it has dropped in value is not the right time to do so. In regards to RSPs, we recommend leaving them alone as they are designed to help when you retire and they are generally an exempt asset that your creditors cannot force you to redeem.

Watch for Assistance from Government and Utilities

There has been a continual stream of different announcements from government and large businesses about relief measures being put into place. Many banks are offering deferrals on payments and reduced interest on debt. Utilities such as BC Hydro and Fortis have announced programs designed to allow you to miss multiple months worth of payments that don’t have to be paid back. Be careful though to also watch for scams.

Both the Federal government and the Provincial government have announced multiple relief measures such as providing people funds directly and freezing student loans which in turn can help you with your other debt. If you have not already applied for the Canada Relief Emergency Benefit, do so now as there may be $2,000 per month available. Here are the links to the government sites:

We recommend focussing on the government websites and reputable business websites so that you can avoid falling victim to a scam.

Ask for Help

If you are facing debt pressure, ask a Licensed Insolvency Trustee (LIT) for help. A LIT is authorized by the Federal government to provide assistance. Most LITs offer a free initial consultation so you can find out about your specific financial options.  Offices are open via telephone or video conferencing.

Many creditors have backed off on collection action at this time. The Courts are currently closed so no creditor would be able to sue if they tried. However, if you are still facing debt pressure, reach out to a Licensed Insolvency Trustee (LIT).

Other less formal options would include sending your creditors a registered letter that you only want to communicate in writing. In addition, in BC, if a secured creditor repossesses your pleasure vehicle or RV they would be prevented from suing you for the unpaid balance pursuant to Section 67(b) of the Personal Property Security Act. This is commonly referred to as “seize or sue”.

One solution that LITs can provide is a Consumer Proposal where your unsecured debts are consolidated, including student loans and income taxes, without interest, allowing you to have one monthly affordable payment. There are lots of resources available both on line and via the telephone if you are feeling despondent about what is going on. Thankfully, we can still connect with friends and family with social media.

While some of these terms may sounds scary, schedule an appointment via telephone from the comfort of your home and ask questions. Soon you will realize that there is a pathway to a better financial future. Go ahead and make that first appointment, it’s free!

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.