The impact of the Coronavirus is upon us. Our best collective response is to do what we can to flatten the curve and ensure the impact on our healthcare system is as small as it can be.
However, we also know that for many Canadians, there will be both short term and long term financial complications.
UPDATE August 5, 2020: We will keep this post updated with links and additional information regarding income and payment support programs as they come out. This post is about managing your budget and bill payments over the coming weeks.
Below is some information about how Hoyes Michalos is operating to respond to our clients and some professional advice we hope can help you deal with some of the uncertainty surrounding your finances while this unfolds.
If you find yourself facing creditor actions, please read our follow-up post on dealing with creditors during the crisis.
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Our Offices & Client Support
Hoyes, Michalos & Associates is committed to our clients and staff. To ensure the safety of our staff and clients our team is working from home. We are responding to phone calls and emails so we can meet the needs of our clients and Ontarians worried about their debt situation as they find their finances changing during the current crisis.
We now offer all services electronically via email, phone and video chat. Documents can also be signed electronically via HelloSign (a Dropbox company).
We know that these times create uncertainty, both emotional and financial. The entire Hoyes Michalos team is committed to providing the best level of service and care you expect from us.
Managing Your Bills & Debt Payments
We know there is stress and anxiety in not knowing if you will be able to keep paying your bills. You may already be out of work or may be worried about the long term impact on your employer and job.
Here are some tips and information that can help you take control of your finances right now.
- The Canadian Government has waived the one-week waiting period for EI sickness benefits for those quarantined due to COVID-19. Application information can be found here: https://www.canada.ca/en/employment-social-development/corporate/notices/coronavirus.html.
- In the coming months, the Canadian Government plans to temporarily boost the Canada Child Benefit to help parents cover the cost of child care or other impacts of having to stay home.
- Updated May 15, 2020: The Government announced the Canada Emergency Response Benefit on March 25, which provides $2,000 a month for 4 months. The CERB has now been extended to 6 months to include the month of September.
- Updated April 15, 2020: The government announced that the eligibility criteria for CERB will now expand to help other affected workers. If you earn $1,000 or less per month you can now apply for the CERB. This helps gig workers and those working very limited hours. Also, anyone with a seasonal job that was canceled due to COVID-19 can now qualify for CERB. If your EI benefits ran out after January 31, you can also apply.
- A full list of relief benefits for individuals can be found here: https://www.canada.ca/en/department-finance/economic-response-plan.html#individual
- We suggest you cut back on all non-essential expenses as soon as you can. While online buying may be tempting to avoid stores, keep an eye on your boredom spending.
- If you are working, keep up with your bills and debt payments. If you are worried about down the road, make at least your minimum payments to avoid late charges, penalties, and potential negative hits to your credit.
- If you are out of work or expect to be, you may need to prioritize payments. You will want to focus on high priorities like your rent and utilities. You may even want to prioritize your cell phone bill and internet bill if you are self-quarantining at home to ensure you have access to both information and the ability to contact friends and family.
- Some lenders have begun to offer deferral options for mortgages and other credit products to avoid having their customers default. Contact your lender to see if you qualify.
- Credit card companies may offer interest rate reductions for affected cardholders. Contact your credit card company but realize, if you defer payments, interest will still accumulate on interest even at the reduced amount.
- Updated April 22, 2020: The Government announced a new Canada Emergency Student Benefit (CESB). Eligible current post-secondary students or students beginning their studies in September 2020 receive $1,250 a month from May to August and if you are taking care of someone else or have a disability, that amount increases to $1,750 monthly. If you’re a student earning less than $1,000 per month, you can apply. If you graduated post-secondary in December 2019 or after, you can also qualify. The benefit will be delivered through CRA. Please note that if you already receive CERB or EI, you cannot also receive this CESB.
- As a reminder, CERB and CESB will be considered taxable income when you file your 2020 tax return next year. We provide information for what happens when you face a tax bill for CERB and CESB payments.
- Take advantage of other deferral or hardship provisions. If you have student debt, a plan has already been announced to implement a six-month, interest-free, moratorium on Canada Student Loan payments for all individuals who are in the process of repaying their loans. You can also contact Canada Student Loans about a temporary student loan revision of terms.
- For self-employed and small businesses, Revenue Canada has advised they will be providing an extension for tax filing and payments. Investigate what can help you manage your cash flow but realize you will have to catch up eventually. The Canada Emergency Response Benefit also applies to self-employed individuals who would not normally qualify for EI.
- Don’t hesitate to talk with other creditors about a deferral. If you don’t ask, you won’t know what they will say.
- Be very careful about taking on new debt. Some may have to use credit cards, it’s reality, we understand that. Keep your expenses and balances as low as you can, and if you are working right now, even part-time, avoid high-cost payday loans. Be ready to tackle those balances when you return to work.
Will my creditors call me?
If you have been current on your payments to date, you will not likely see collection calls starting right after your first missed payment. While a creditor or collection agency does have the right to pursue all legal options to collect on an outstanding bill, the truth is this will take time.
- Expect to receive automated late payment notifications. These are system generated and will likely continue.
- Creditors may or may not refer you to collections during this window since many of their offices are also shut down or working with limited staffing.
- Even if a creditor decides to pursue you through the court system, they will send you a statement of claim. You have 21 days to dispute the claim, which gives you time to deal with the situation.
- Don’t be afraid to contact your creditors. They know the situation & will likely work with you.
If you receive calls and you can’t pay, simply tell the collector your situation, that you are off work, and can’t pay right now. Don’t let a collection agent stress you out more.
If you are worried about creditor actions, see our post about dealing with creditors during the Coronavirus crisis.
Should I file a bankruptcy or proposal right now?
If you have been dealing with your debts on your own, the recent crisis may set your debt repayment plans back.
If your household income has dropped and you feel you can no longer manage your debt, you may not need to file a bankruptcy or proposal right away. Reason being, you may be “creditor proof.”
To be creditor or collection proof means you have no income or assets that can be seized for debt repayment. If you don’t have any wages or assets for creditors to seize, you have nothing to protect. Pension income and unemployment insurance benefits cannot be garnisheed. Therefore, an insolvency filing may not be necessary at this time. You will want to use what income you have to pay your rent, food and other living costs.
An exception to this rule may be banks where you deposit money and owe money. If they have the staffing, they may initiate processes to seize payments directly from your bank account. CRA also does not need a court order to garnish income and can garnish pension & EI.
If you still have some income, talk with a Trustee. We are still answering the phones. We can help you decide if you should file now or wait it out.
What if I’m already bankrupt or in a consumer proposal?
If you are still working, keep up with your payments so you don’t jeopardize your discharge.
If you are off work, contact your trustee right away. The earlier you contact your trustee, the greater your options for dealing with late or missed payments for your filing. We have staff who can answer your questions and concerns. Since many are working from home, we ask that you be patient with our response times.
Beware of Emerging COVID-19 Scams
Unfortunately, scammers are exploiting public fears about this virus.
You may notice an increase in spam phone calls now that marketers and spammers know that more people are at home.
Cybercriminals are sending emails claiming to be from legitimate organizations with information about COVID-19.
Think twice, if not three times, about every message you receive asking you to donate, make a payment, click on a link, or send information and passwords.
Right now, your priority is your health and safety
While we don’t know how long this event will last, it is temporary. We ask that you focus on taking care of yourself and your family. Practice social distancing. If you are not feeling well, please stay at home. Follow all Health Canada and Health Ontario quarantine recommendations.
Contact friends and family by email, phone, text or any other digital means. Stay in touch and keep everyone’s spirits up as much as possible.
There is reason to be optimistic. This will end. Manage your anxiety and stay safe.