During this challenging time, many Canadians are dealing with changes in their financial situation and are having to make tough choices. Some may even be thinking about filing for bankruptcy or making a proposal to their creditors.
If you are considering seeking solutions to deal with overwhelming debt due to COVID-19, it is important to be aware of all your options so you can make the right decision once you are ultimately ready to move forward. During these uncertain times, a great place to start is meeting with a Licensed Insolvency Trustee.
What is a Licensed Insolvency Trustee?
Licensed Insolvency Trustees (LITs) are federally regulated professionals who provide advice and services to individuals and businesses who are struggling with debt. LITs provide guidance for people when they are making choices regarding their financial difficulties, generally when it comes to filing a consumer proposal or bankruptcy.
A personal consultation with a Licensed Insolvency Trustee is free and can take place either over the phone or via videoconference during the COVID-19 pandemic. This is your chance to tell your “story” and discuss your finances with an LIT.
These consultations give Licensed Insolvency Trustees a complete understanding of your income, your debts and your assets. With this information, they have what they need to review all possible debt solutions with you, what they entail, and the cost and potential consequences associated with them. Deciding to file a consumer proposal or bankruptcy should not be taken lightly, and these consultations allow you to make an informed decision.
Licensed Insolvency Trustees during COVID-19
Even though at Grant Thornton Limited we have been able to adapt our workflow to administer bankruptcies and consumer proposals virtually, now may not be the right time for you to file for insolvency.
In response to the current COVID-19 crisis, the government and many organizations have established programs and initiatives to help Canadians financially during the pandemic. Before you consider filing for bankruptcy or a proposal, it is best that you explore whether you can benefit from these programs first.
The Government of Canada has introduced programs* like the Canadian Emergency Response Benefit (CERB), the Canadian Emergency Student Benefit (CESB) and has temporarily raised GST and Child Benefit amounts to help those who have lost income due to the pandemic. At Grant Thornton Limited, we have produced a COVID-19 Financial Programs and Resources Guide on our website for your reference.
*Note: Many of these programs have ended included the CERB and the CESB. To learn more about the current programs offered by the Government of Canada, visit their website.
Many creditors (such as the Canada Revenue Agency, banks, utility providers and others) also understand the impact that COVID-19 is having on Canadians and are open to discussing flexible solutions like deferring payments or extending deadlines. You should contact your creditors directly to see what they can do for you. As always, be careful of anyone offering quick credit fixes or debt services that sound too good to be true.
These incentives were also put in place to provide some financial relief to those affected by COVID-19. While they offer security in the short term, it’s important to understand that these are deferrals of payments, not a forgiveness of payments.
Regarding mortgage or credit card payment deferrals, it’s also important to note that you will still be charged interest during the deferral period. This means you will most likely end up paying more in the long run if you defer than if you continue to pay your payments. If you cannot afford your payments, then please take advantage of these initiatives, however, if you can afford to keep up with your payments, it is in your best interest to do so.
If you don’t know where to start or are overwhelmed with financial decisions, Licensed Insolvency Trustees are knowledgeable and can help you sort out a plan. A free consultation with an LIT comes with no obligation and they can provide guidance on the various programs available, budgeting strategies and debt management technics that may help you through these challenging times.
Filing a consumer proposal or bankruptcy during COVID-19
If you have reviewed all your options and decided a bankruptcy or proposal is the best decision for you, we are here to help. Licensed Insolvency Trustees are the only professionals authorized to administer government-regulated insolvency proceedings such as consumer proposals and bankruptcies, that allow you to be discharged from your debt.
If you currently have an existing bankruptcy or proposal, please work with your LIT to discuss any potential flexibility you may need. The Office of the Superintendent of Bankruptcy is providing LITs with regular guidance throughout this crisis to address any challenges clients may be facing.
While our Grant Thornton offices will remain closed until government and health authorities remove restrictions, our colleagues across the country are working remotely. We can still be reached at our regular office numbers and email addresses, and we are also available to meet with you via video conferencing. Our team remains committed to helping you manage your financial challenges through this difficult period.