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April 21, 2020
In these extraordinary circumstances, making important financial decisions is often intimidating. If you are struggling with debt during the pandemic, it can be hard to know what to do.
In these extraordinary circumstances, making important financial decisions is often intimidating. If you are struggling with debt during the pandemic, it can be hard to know what to do. Should you get debt help now or later? The health crisis and subsequent lockdown have put many people in financial limbo. Your instincts might tell you to just hunker down and wait it out. But is this the best thing to do?
COVID-19 will have a distinct before and after, but the phase we’re in right now is very uncertain. In stressful times like these, it’s important to keep yourself informed so that your questions don’t go unanswered. BDO Licensed Insolvency Trustee Nancy Snedden recently spoke with us to shed some light on the topic of dealing with debt during the pandemic.
We asked Nancy to comment on four different debt dilemmas that you might be struggling with during these uncertain times.
“Making the decision to get help with your debt can be a difficult one,” says Nancy. “The most important thing to do right now is to focus on your household’s primary financial needs. If you were already considering speaking to a professional, moving forward makes sense. At the very least, you will know your options. In fact, the right debt solution can free up significant financial resources and allow you to meet your household’s needs more comfortably. There is no single solution to a debt problem, but the sooner you speak with a professional, the more options will be available for you to consider.”
“If you have applied for all the financial assistance the government has to offer but are still struggling to meet your monthly commitments, your next course of action should be to speak to your creditors. Many creditors are offering reduced or deferred payment options. You will also want to re-evaluate your spending and prepare a crisis budget. Ensure you are cutting back where you can to make your income stretch as far as possible. However, if debt is holding you back from being able to adapt to this new situation, it’s a good idea to understand your options. From debt consolidation and credit counselling to filing a consumer proposal, a Licensed Insolvency Trustee can provide guidance on all potential debt solutions.”
“Many people will be deferring payments or postponing rent, but it’s important to remember that these arrangements aren’t payment waivers. These are temporary measures that will help you in the short-term but will ultimately add to your current and future debt load. If your debts were hard to manage before the pandemic, they will likely be harder to deal with after the pandemic. A Licensed Insolvency Trustee will discuss your financial obligations with you now and explain how you can be better prepared for what happens next. The last thing you want is to be worried about how you will cope financially once things go back to normal.”
“In this situation, you are technically “creditor proof” or “judgement proof,” and your creditors will not be able to pursue legal action against you. Remember also that government assistance such as employment insurance (like the CERB) pensions, old-age security or disability income cannot be garnished by most of your creditors. However, if you have debts with your financial institution, they can access your accounts and take what is owed to them. If you are creditor proof, you may ignore your creditors on a short-term basis or open a new bank account elsewhere. However, your situation can quickly change. Being creditor proof is not a long-term solution. It is better to be proactive about your debts, whatever your circumstances may be.”
Thanks to Nancy Snedden for answering these important and common questions.
If you have other debt concerns and are wondering what your options are, you can book a free initial consultation and speak with a licensed debt professional about your specific situation. All BDO employees are working from home and can assist you by phone or video.
Are you interested in learning more about dealing with debt during a crisis? Follow us on Twitter and Facebook to check out what’s happening in the world of personal finance.
April 21, 2020
In these extraordinary circumstances, making important financial decisions is often intimidating. If you are struggling with debt during the pandemic, it can be hard to know what to do.
