The financial impact of COVID-19 on Canadians to date has been staggering. Layoffs and the temporary shutdown of businesses have forced many to have reduced incomes, put off debt payments, and increase their credit card debt.
Here are four ways you can help manage debt during the COVID-19 pandemic.
Build an emergency budget
While it’s too late to save for this emergency, it’s not too late to create a new budget based on your changes in income and expenses. It is important to include all family members in the discussion about reducing costs and consider cancelling non-essential monthly fees like subscription services as these can add up quickly.
Look to your bank for assistance
Many of Canada’s major banks have implemented changes to lending rules in response to COVID-19. These changes are designed for people experiencing loss of income and businesses experiencing profit loss.
Mortgage payment deferrals, skipping payments, loan extensions, revised terms or even reduced interest rates are all things your lenders can consider.
Look for debt repayment options
Losing any amount of your income can be frightening. As the COVID-19 crisis continues to evolve, there are several resources available to eligible Canadians to help relieve some financial burden. One of the debt repayment options is the consumer proposal. A consumer proposal addresses unsecured debt can take on five different aspects related to credit card debt, personal loans, income tax, personal lines of credit, and student loans.
Recognizing the early signs of debt
Not knowing how much you owe can make the situation worse. Recognizing these early signs of debt will help you create a secure financial situation. Here are some early signs of debt:
- Treating your savings as an emergency fund.
- Taking on new debt in order to payoff existing debt without a strategy.
- Feeling overwhelmed or losing sleep over expenses.
- Anxiety about your financial health is causing rifts in your personal relationships.
The negative impacts of COVID-19 are widespread, affecting all Canadians. If you’re experiencing financial hardship during these exceptional times, please call us for a free consultation. Although you may feel overwhelmed, the first step to addressing debt is to come up with a plan. This is where we can help.