During these increasingly difficult times, the financial impact of COVID-19 on Canadians to date has been staggering and it doesn’t seem to be getting better. Ongoing layoffs and the shutdown of non-essential services has caused many on the Sunshine Coast, and all British Columbians to have reduced incomes with limited change in essential expenses, including continuing in their debt repayment.
These circumstances are fast-becoming dire for many, as people have become challenged to get through the financial hardship this pandemic has created. With this new reality, it’s no surprise that the majority of Canadians are more concerned about their financial health than their physical wellbeing.
Here are five ways Canadians can help manage debt during the COVID-19 pandemic:
Look to your bank for assistance
Many of Canada’s major banks have implemented changes to lending rules in response to COVID-19. Their goal is to help alleviate the financial strain on Canadians this pandemic has created, and are designed for people experiencing loss of income and businesses experiencing profit loss.
Things like mortgage payment deferrals, skipping payments, loan extensions, revised terms or even reduced interest rates are all things your lenders can consider. Contact your bank, financial advisor or credit union as soon as possible for further information and assistance, and find out what help they can offer in accordance to your individual financial situation.
If you can, use deferred payments to create or deepen your emergency savings for the future, as no one knows for certain the far-reaching financial implications of this pandemic.
Apply for the financial help you are eligible for
Losing any amount of your income, or experiencing income instability, can be frightening. As the COVID-19 crisis continues to evolve, there are several resources available to eligible Canadians to help relieve some of the financial stress and burden. Financial assistance can come from traditional Employment Insurance, municipal and provincial rental assistance programs for tenants, the Emergency Care Benefit program, or extended benefits at work, if available.
Research what you and your family members are eligible for (as it could differ for each income earner or student), then submit any applications promptly as processing times may take longer due to application numbers and the possibility that staff and hours of operation may be reduced.
Build an emergency budget
Once you know what financial assistance your bank or lender may offer, and what government assistance you are eligible for, create a new budget combining this information and your current financial situation. Create this new emergency budget based on things such as a reduced level of income and factor in any changes to your monthly expenses. Include all family members in a discussion about reducing costs, and consider cancelling or putting on hold non-essential monthly fees like subscription services - these can add up.
While self-isolating, put other monthly expenses like parking passes and gym memberships on hold as this money could be used for essential expenses, or savings, instead.
Consider a personal loan in an emergency
Personal loans don’t require any security and can be used for any purpose, making them an ideal financial resource in the face of an emergency. A personal loan is a flexible form of financing that allows you to access a lump sum with a fixed repayment schedule. This type of loan can be obtained quickly, especially through a licensed online lender.
Everyone is experiencing some level of uncertainty during this time, and that means there’s no shame in asking for help. If you fear looming debt issues as a result of COVID-19 or other existing circumstances, seek the advice of a credit counselling service. Credit counsellors can offer tailored advice or enrol you (if you qualify) in a Debt Management Program (DMP) to consolidate unsecured debts into one, affordable, monthly payment. Creditors are more likely to accept a DMP in a financial crisis because some payment will be collected, and they know you are making an effort to provide consistent payments.
“Times are really tough right now, and what we are seeing with the COVID-19 pandemic is completely unprecedented”, explains Loans Canada Chief Technology Officer, Cris Ravazzano.
“We are seeing a lot of volatility in the lending space, with some lenders slowing or even temporarily stopping their operations. On the other hand, many lending institutions are designated as essential services and are choosing to keep their doors open. As Canada’s first and largest loan comparison website, our close relationship with these institutions enables us to continue to provide Canadians with the emergency financial solutions they need. We have also made it a priority to maintain up-to-date information on COVID-19’s effect on the credit industry and invite Canadians to visit www.loanscanada.ca for the latest information.”
The impacts of COVID-19 are widespread, affecting British Columbians and all Canadians alike. If you’re experiencing financial hardship and uncertainty, and are coping with debt during these exceptional times, use what tools and forms of relief are available to help manage your circumstances. Although you may feel overwhelmed, the first step to addressing debt and having some peace of mind is to come up with a comprehensive plan.