18/12/2020 by Jonathan McNair
Facing Financial Stress During COVID-19? A Licensed Insolvency Trustee Can Help Assess Your Options
COVID-19 has caused unprecedented financial hardship for Canadians. Business closures, employee lay-offs, and income loss due to illness have all skyrocketed in 2020. Some COVID-19 relief measures and government assistance programs are ending, making individuals even more vulnerable to financial trouble.
Mortgage deferral programs and pauses on debt collections provided temporary relief for some, but the inevitable is starting to happen. Insolvencies spiked in the last quarter of 2020 and increasing numbers of Canadians will need to file for bankruptcy as the pandemic wears on—particularly those who were living paycheque to paycheque before the pandemic hit.
A Licenced Insolvency Trustee Can Help With Financial Stress During COVID-19
The good news in all of this is that there are a wide range of credit relief services and debt solutions if you are dealing with financial stress due to COVID-19. You need reliable information to assess the range of options (such as a consumer proposal or bankruptcy) and understand the cost and potential consequences associated with each. A Licensed Insolvency Trustee (“LIT”) provides the vital advice and information you need to ensure your debt is handled correctly and your rights are respected. Initial consultation with a Licensed Insolvency Trustee is free and can take place either over the phone or via videoconference.
How We Have Adapted To Serve You During COVID-19
The Licensed Insolvency Trustees at Crowe MacKay & Company are committed to giving you the financial assistance you need during the pandemic. We have adopted our workflow to meet our clients’ needs. We offer virtual meetings (which you can book online here) to answer your questions and discuss your finances. Teleconferences and videoconferences have proved to be a safe, convenient, and effective way to serve our clients during COVID-19. Documents can be shared by email or fax and necessary paperwork can be filed virtually on your behalf.
Options for Dealing With COVID-19 debt
Depending on a variety of factors such as how much you owe, the size of your household, and your monthly income, we can recommend the best option for you. Here are some of the debt relief options to discuss with one of our Licenced insolvency Trustees:
- Debt consolidation. There are different types of debt consolidation. One type of consolidation creates a debt management program that you use your income to pay. Another type requires you to borrow more money (known as a “consolidation loan”) and use it to pay off all creditors, leaving you with just one monthly payment. This option is not for everyone as many people in financial difficulty cannot get a consolidation loan through conventional sources (see above for discussion on credit counselling). If you can qualify for a loan, it is important to shop around for the best interest rates and repayment terms.
- Government assistance programs, tax credits, and deferrals. Federal and provincial governments introduced measures to reduce hardship caused by COVID-19, such as the Canada Emergency Response Benefit or “CERB” (which has now ended), the Canada Recovery Benefit, the BC Emergency Benefit for Workers, student loan repayment deferrals, specialized tax credits, payment plans, and time extensions for certain payments. The eligibility rules can be complex and changes to support programs are continually being rolled out. Our insolvency trustees can help you understand the available programs and how they can work as part of your debt relief plan.
- Relief programs offered by creditors. In response to COVID-19, many creditors are allowing payment deferrals or payment deadline extensions. You can contact your bank, credit card company, or mortgage lender directly to ask about the options available to you. Be sure you understand what is offered—payment deferrals do not mean that the debt is forgiven, and in most cases, you will still be charged interest on the amount owed, despite any deferral.
- Consumer proposal. A consumer proposal is a flexible, customizable option that consolidates your unsecured debt. A consumer proposal allows you to keep all of your assets, make smaller payments than what you owe, and get more time to pay it off. It also offers credit protection, preventing you from getting calls from collection agencies and wage garnishments. See here for our recent discussion of the benefits of consumer proposal, or better yet, contact one of our Licensed Insolvency Trustees for more information about whether this debt relief option is right for you.
- Personal bankruptcy. There are significant differences between a consumer proposal and a personal bankruptcy, which our bankruptcy trustees can help you understand. Filing for bankruptcy is a major decision with serious consequences including loss of certain assets, but it may be the best option to settle your debts. Talk to our bankruptcy trustees today to find out if you are eligible for personal bankruptcy and to learn how we can help you throughout the bankruptcy process.
Are You Looking for Debt Relief Options During COVID-19?
If you are facing financial stress during COVID-19, the Licensed Insolvency Trustees at Crowe MacKay & Company are here to provide you with debt solutions. The financial impacts of COVID-19 are varied, which means that the debt solution for one person may not be right for you. At the end of the day, whether a consumer proposal, bankruptcy, or other debt solution is recommended depends on your personal circumstances. Contact us today at 604-689-3928 to book a virtual meeting with one of our licensed insolvency trustees. Our professionals will work with you to explore the pros and cons of each option and help you decide which debt relief solution is right for you.