With small claims court proceedings no longer being suspended due to COVID-19, debt collectors could become more active pursuing claims across Canada. In some provinces, courts are holding virtual hearings. If you have “coronavirus debt” and think debt collectors might be after you, Credit Canada Debt Solutions can give you all your best options for dealing with debt.
Despite Coronavirus, Debt Collectors are Back in Business
Regarding COVID-19 and your finances, one thing is for certain during these uncertain times – you’ve got options when dealing with a debt collection agency.
We’ve seen some creditors put all legal actions on hold throughout the pandemic, but those holds are now set to expire, and as they do, there is a sense that some collectors may now become more aggressive to send files to legal authorities. Since the courts handle claims of up to $35,000 (up from $25,000), a lot of delinquent accounts – especially those related to credit card debt – will soon be taken on by a Canada collections agency.
While claims must still be served physically, creditors can file claims electronically. We saw one case where a process server left the claim on the client's front step, and took a photo as proof that the documents were served.
What Happens to Debt and Deferred Payments
Many payment deferrals are ending now, or are set to end within the next couple of weeks, leaving many consumers panicking. Creditors have varying policies on payment terms once payment deferrals end. Some creditors are expecting borrowers to catch up immediately or over time with extra payments.
A significant number of creditors have reinstated their payment requirements and, in some cases, consumers have already been late on these newly reinstated payments. As a result, creditors have increased the interest charges on their clients’ outstanding debt, thus making their debt situation much worse.
Unfortunately, we’ve also seen cases where lenders will go directly into a person’s bank account and pull all outstanding payments in one fell swoop. One auto lender grabbed 7 payments from a client through a pre authorized debit (PAD), forcing that client into insolvency.
Call Credit Canada to Avoid Collection Calls
First and foremost, stop worrying. If you’re employed or have some form of income, action can be taken to avert or put a stop to collections in one simple step. Call Credit Canada at 1.800.267.2272 and we’ll put one of our certified non-profit Credit Counsellors between you, your creditors, and debt collectors. We’ll provide counselling and financial coaching support that comes free of charge. We'll also be happy to answer your questions or book you an appointment to speak confidentially about your situation without obligation or judgment.
Should you decide to sign up for our Debt Consolidation Program, you can merge your unsecured debts into one affordable monthly payment with reduced or stopped interest, and a set completion date that works with your budget, especially as COVID-19 lingers. We help by working directly with your creditors, side-stepping the debt collector altogether. Along with manageable debt payments, you stand to get relief from future interest on your debt.
Meanwhile, know your rights when dealing with debt collectors by visiting the Government of Canada website. Additionally, provincial governments offer guidance concerning your rights and bill collectors. For instance, Ontario residents can visit Consumer Protection Ontario.
Another Option: Talk Directly with Creditors
Now, depending on your financial circumstances and if you’re up for it, there is another option available to you: Speaking directly with your creditors. If you were current on your debt payments prior to the coronavirus outbreak, but have since stopped making payments, chances are COVID-19 has kept your account from being sent to a collection agency.
This means you have much more bargaining power before your account is sent to collections. So, pick up the phone and reach out to your creditors before you have no choice but to deal with the often less-forgiving collection agency. Get updates from your creditors about mortgage deferrals, if that applies to you, and any other opportunities for relief on other credit products, including auto loans, personal loans, and even credit cards where reduced interest rates might apply.
You Get More Sympathy Because of COVID-19
When speaking with creditors, prepare to keep your story about your finances clear and simple – and stay on their good side by never losing your temper. Make notes on any new arrangements you might agree upon. Even as the pandemic winds down, creditors realize that many Canadians are still facing uphill financial battles, and they may be open to working with you to set a new repayment plan in place, and find additional ways to deal with financial problems that can give you peace of mind.
Each of Canada’s major financial institutions have set up an online COVID-19 page where you can learn more, including details about how CERB benefits have been extended. Here are some website that may help:
Get Any Agreement with Creditors in Writing
In addition to speaking with creditors by phone, writing to them about your troubles is a very wise move. Reach out to them through either email or old-fashioned “snail mail.” A letter to creditors provides a paper trail so that in the future, if they ever question your failure to contact them, you can provide evidence that you did.
To contact your creditors in writing, check out our free downloadable COVID-19 Letter to Your Creditors you can customize and send to your creditors explaining your current financial situation. Most importantly, if you and your creditor are able to reach some sort of financial arrangement, then be sure you ask them to send you the newly agreed-upon details in writing.
In our blog How to Speak to Creditors During Coronavirus, we talked about ways to deal with problem debt during the COVID-19 crisis. While some points have been touched on here, we urge you to revisit that blog for more helpful advice.
Credit Canada can help during COVID-19
It’s unfortunate, but coronavirus and debt go hand-in-hand. If you’re up against a brick wall with coronavirus debt, stop fretting and take action. We’re all in this together as Canadians and there are caring professionals out there who can lend you a helping hand, like us! Give us a call at 1.800.267.2272 and we'll set you up with a free appointment with one of our certified Credit Counsellors who will be happy to guide you through these turbulent financial times.
