Large companies that owe creditors more than $5 million can consider the Companies Creditors Arrangement Act (CCAA) as an alternative to Bankruptcy. If you are concerned about debt, reach out to a Licensed Insolvency Trustee (LIT) today to discuss the CCAA.
During the pandemic, it seems as though Canadians have been given a pass on monthly bill payments. So can bill collectors still call during Covid-19?
The government, as well as the banks and lenders, are, thankfully, offering all types of relief. Mortgage payments have been deferred. There is a moratorium on evictions. There are funds to handle utility bill emergencies. And all you have to do to skip your credit card payment is call your issuer and follow a few voice prompts.
Can Bill Collectors Sue You During Covid-19?
But as much as you might like to see a debt jubilee, those bill collectors are lurking in the shadows. They may not be in their offices. But like millions of other Canadians, they don’t need much more than a laptop and a headset to work from home. If you owe money that you haven’t been able to pay and you haven’t received any phone calls, it’s just a matter of time. For Canadians with debt who are already living from one paycheque to the next, collection activity may be inevitable.
If you’re currently having financial difficulty or anticipate a problem in the future, don’t wait for creditors to call. Be proactive. Stay ahead of any potential credit issues. Talk to your mortgage company, banks, credit card issuers and other lenders before your bills are overdue. Definitely call them before they start calling you.
How to Handle Creditor and Bill Collector Calls During Covid-19
If you have bills that have already gone to collections, don’t avoid the call. Speak to the debt collector so that you can verify that the bill is actually yours. Keep in mind that the collection agency should have contacted you in writing prior to calling you on the phone.
When you take the call, keep it short. You don’t have to offer an immediate resolution. Your goal is to gather information and call back at a later time. During that initial call:
- Make sure the debt is yours before you agree to anything. Ask the name of the original creditor, the amount owed, and the date the bill was incurred.
- Do not give out any information about any other debts you may have.
- Do not reveal where you work, even if you are temporarily furloughed because you could work there again.
- Verify the mailing address if the caller already has one and wants to send you additional information.
How to Safely Pay a Bill Collector
If you have confirmed that the bill is yours and you are able to pay, do not use cash or a bank card. And do not agree to a bank draft. You can protect your account information by using your bank’s online bill-paying service. Alternatively, use a prepaid credit card expressly for the purpose of paying the debt. You may prefer to deal with the original creditor, but that may cause unnecessary confusion. Handle the payment directly through the collection agency that called you.
If you are unable to pay the bill in full, try to make a payment arrangement. But don’t promise anything you can’t deliver even though the collector may pressure you. If you can make a partial payment, you should do so to avoid falling any further behind than you have to.
Check for Fraud
The virus itself is not the only thing you need to worry about during the Covid-19 crisis. There are also plenty of scams. Many of them come via the telephone. So, it can be a bit nerve-wracking to carry on a conversation with someone you don’t know during this time. Particularly if they want to discuss finances.
Scammers may offer to provide financial relief, such as a loan or debt consolidation. You might be threatened with legal action or told that your power will be disconnected if you don’t pay immediately. One of the more common schemes is the offer to complete a Canadian Emergency Relief Benefit application on your behalf for a fee. The CERB application process is actually quite easy and can be completed over the phone using an automated service.
Follow these rules to be cautious:
- Do not give out any personal or financial information.
- Do not give out your credit card number or bank information.
- Do not tolerate abusive or threatening language.
- Do not take the bill collectors word for it. They must know the exact amount you owe, who you owe it to, and when the debt was incurred.
- Verify before you pay.
If you have questions about the relief dollars available to you and your family during the pandemic, visit Canada’s Economic Response Plan web page for more information.
Can Bill Collectors Garnish Your CERB Payment?
Debt collectors may threaten you with court action, such as garnishment. In fact, the courts are closed. But, in any case, your benefits cannot be garnished. If you are receiving CERB payments, that money is intended to help you meet your current needs. You do not have to turn it over to a collector no matter what the caller says. Even if your wages were being garnished prior to Covid-19 while you were still employed, your CERB payment is exempt from garnishment.
There is an exception, however. Once you deposit the CERB check in your account, it is considered cash. If you owe the bank, they have a right to seize the money.
There are other types of payments that cannot be garnished. These include unemployment benefits, Old Age Security benefits, pension and disability benefits.
Do You Have to Pay a Bankrupt Creditor?
Individuals aren´t the only ones floundering during these challenging economic times. Many businesses, as well, will permanently close as a result of the shutdown. If you owe money to a business that closes its doors, does that mean you don’t have to pay? Unfortunately, there will still be someone in line waiting to take your money.
Years ago, if you bought furniture from Joe’s Furniture, the store might carry your loan. These days, that’s not likely to be the case. You don’t owe Joe’s Furniture; you owe the bank. But even if the store extended the credit to you, the trustees for the bankruptcy will attempt to collect any money due.
If a small company goes under, there may be no one in line to collect the money you owe. But don’t count on it. Debt typically doesn’t just disappear without action on your part. Even if you reach the statute of limitations in 6 years or so, the debt will still appear on your record.
So, yes, if a bill collector is calling about the now-defunct Joe’s Furniture, you still owe the money.
Should You Pay Down Debt Now?
Probably the most important question to ask yourself is how much can you afford to service your debt. In normal times, we would advise you to pay your bills. But, now may not be the time to square up your finances, particularly if you’re out of a job. Above all, be realistic about when you can expect to return to work. Preserve your cash until you’re back on your feet.
For most people during these uncertain times, the best strategy is to:
- Make the minimum payments.
- Avoid adding more debt.
- Negotiate with your creditors.
- Seek debt relief before your situation turns dire.
- Ask your creditors what options are available to you.
Need More Help?
Can bill collectors still call during Covid-19? Yes, they can and they will. Any payment arrangements you make now could make it more difficult for you to meet your obligations in the future. Take a good look at your finances. Will you be able to make ends meet when you eventually return to work? If you have more debt than you can handle and can’t see a way forward, there is no need to continue to struggle. You can do something about it right now.
Wouldn’t it be great to have a fresh start with a plan in place to reclaim your financial freedom? There is no better time… and Adamson & Associates can help you get there. Your first no-obligation consultation is free. Call us at 1-519-310-5646.