What should you do if you have a payment due soon and you’re not sure if you’ll be able to pay it?
Be proactive and communicate! Your credit rating is impacted by your debt and bill payment history. Missing or reducing a payment may be necessary under the circumstances right now so you are better off being proactive and calling the service provider/lender in advance to see what options are available rather than doing nothing, letting the payment slip, and potentially hurting your credit rating for future borrowing needs.
For loan or lease payments, payment deferral may be an option. Many banks are offering mortgage deferral or skipped payment options. However, it’s important to understand that this is not payment forgiveness. You will have to make these payments at some point in the future so be sure that you understand when the missed payments will be due so that you can plan accordingly. In addition, find out what the cost of the deferral will be. Interest on your loan or lease will continue, so deferral will increase the amount of interest you will pay over the life of the loan or lease.
For bills like rent, utilities and other necessities, your landlord or service provider may offer temporary relief that could help you manage your expenses until your income returns to its previous level.
Should you borrow money to help cover expenses while your income is low?
Borrowing money comes at a cost (i.e. interest) so before you do, take a look at your spending and decide what you can forgo temporarily to reduce the amount of income you need in the short term.
If you must borrow money, explore your options. Some money costs more to borrow. Avoid payday loans and high-interest credit cards and look to lower-cost debt options, where possible.
What if you haven’t yet filed your taxes? With everything else going on, it may have slipped your mind.
Don’t worry. The tax deadline for filing an individual tax return was extended from April 30th to June 1st (June 15th if self-employed).
Although the CRA has indicated that no late-filing penalties will be assessed if payments are made by September 1st, you are encouraged to file by the June deadline so that your entitlement calculations for future government benefits can reflect your latest income level.
The University of Waterloo has a number of experts available for comment on various aspects of the COVID-19 pandemic, click here to see the up-to-date list.
