As the economy is beginning to show signs of recovery and the physical distancing rules are being eased, various benefits and deferrals mandated by the government are also ending. With the buffer being removed, it is crucial for you to evaluate your financial position to ensure that you’re prepared to handle your debt payments.

For instance, the Canada Revenue Agency’s tax filing deadline for 2019 individual income tax returns is now September 30. Individuals who are not able to make payments by this date will likely face late-filing penalties.

Similarly, over 700,000 households who had been given the benefit of deferring mortgage payments, will soon have to resume these payments.

Basically, all the payments that were temporarily deferred will be due at some point.

Interest rate update

Today, the Bank of Canada issued a press release announcing its decision to keep the interest rate at 0.25%. The interest rate is currently being kept on the lower side to enable individuals and businesses to have access to better credit deals during these unprecedented times.

While it may seem enticing to explore borrowing options, given that the interest rate is low, you should proceed with caution.

Even though the BOC interest rate is lower, it doesn’t mean that all lenders will offer a low rate, especially to those individuals who already have debt to pay off. Also, additional credit can help in the short-term, but it is not sustainable, and you will eventually need a plan to pay it off.

Long term planning is the key to eliminating debt!

What’s the recommended course of action?

It is important to start getting your finances back on track. Some of the things you can do to keep your finances in check are:

• Reviewing all your liabilities and paying off high-interest debt.
• Creating a budget and tracking expenses.
• Avoiding unnecessary debt such as credit card expenses, until absolutely necessary.

Following these steps will help you anticipate and address any future issues such as a lien on your property. If you feel that you need additional support, reach out to credit counseling services to assist in consolidating debt payments or filing for insolvencies.

What’s the right solution?

There is no one size fits all approach. Especially during these times.

The solution usually depends on the type of debt you are carrying. For instance, mortgage debt could be dealt with through a refinancing, if enough equity is available. Unsecured debts might be eligible for settlement, and outstanding utility bills could be handled through a debt consolidation loan.

The key is to consult with a debt counsellor who can walk you through your options and make a plan that’s tailored according to your requirements.

At DebtCare Canada, we have helped thousands of Canadians reduce and restructure their debt. If you’re struggling with mortgage, rent payments, or any other bills, please get in touch so we can help you find a way through.

Contact us by calling or texting 1-888-890-0888 or visit www.debtcare.ca to learn more about our credit counselling services.

You can also find out more about our financial solutions here: https://www.debtcare.ca/financial-products/

The next BOC announcement is scheduled for October 28, 2020.