During the COVID-19 pandemic, many Canadians have lost their jobs or are receiving reduced income.

But while incomes have declined, debt payments haven’t necessarily done the same.

Some lenders offered loan deferrals, but it’s important to note that deferrals aren’t forgiveness. What this means is that you will have to pay those debts eventually — and it may come with extra costs, such as interest for the deferral period.

And not all lenders have even offered these deferrals. Some may expect you to keep making your payments throughout the COVID-19 pandemic, plus your other bills, like housing and utilities.

If you’re in this boat, you might need help to get out of debt.

The Problem with Payday Loans

Payday loans should be avoided completely if you want to get out of debt.

The simple truth is that payday loans rarely (if ever) actually improve your finances. This is because:

• They’re short-term. They need to be repaid within 14 to 62 days.
• They come with sky-high interest rates. Payday lenders often charge an annual interest rate of between 391% and 652%!

The worst part is that payday loans trap you into a vicious cycle that creates more debt.

Take this scenario:

• You take out an advance on your paycheque for $750, plus fees and interest.
• That money must be paid back within three weeks, or 21 days.
• You receive your next paycheque, but your other bills have come due and you need the pay to pay for those obligations.
• You’re unable to pay back the payday loan – what do you do?

For most people, the answer is take to out another payday loan, which creates an unending cycle of paying off debt with more debt.

During the COVID-19 pandemic, payday loans are even more unsustainable. If your income has been affected, you may not have another paycheque to find the funds, or you could be dipping into emergency help benefits, such as CERB payments.

Where to Get Online Debt Help During the COVID-19 Pandemic

There are other options to get out of debt besides payday loans.

You might consider:

• Budget management.
• Financial restructuring or debt consolidation.
• Settling outstanding debts.
• Refinancing your mortgage.
• Special programs (such as the access DebtCare Canada provides to a program that can resolve a CRA back tax problem).
• Filing for insolvency – bankruptcy or a consumer proposal.
• And more.

The exact options will depend on your situation. At DebtCare Canada, our consultants look at your whole financial picture to find the best solution for you.

During COVID-19, you’ll need to get online debt help to maintain physical distancing. DebtCare has been able to operate 100% remotely since the start of the pandemic. You can book a free consultation by:

• Calling 1-888-890-0888
• Texting “HELP” to 1-888-890-0888
• Visiting debtcare.ca