In the pandemic, your creditors are not the enemy

Mass layoffs in the pandemic have led to mass acceptance among providers of mortgages, loans and credit cards that people will not be able to pay what they owe.

And so we’ve seen banks and other financial players offer measures like deferrals on payments to help people get by until the economy gets back to normal. We may not like the terms under which this help is offered – the fact that interest on deferred mortgage payments is added to your balance owing bugs a lot of people. But help is available and it’s well worth using if you’re experiencing financial hardship in the pandemic.

The non-profit credit counselling agency Credit Canada has offered some really helpful tips on how to talk to your creditors if you need debt relief. You could sum them up this way: be a cool customer. Don’t make your creditors the enemy. Instead, prepare for your call, tell your story succinctly, avoid confrontational talk, ask questions about things you don’t understand and keep records.

The feedback I’m hearing from readers about debt deferrals is that the process has been slow in some cases, but people are getting the help they need. So one further tip: stay patient and be prepared to prod your lender if you haven’t heard back.

Young adults, we want to hear from you

As I mentioned in a recent newsletter, I’m working with Globe and Mail personal finance editor Roma Luciw on a podcast for young adults called Stress Test. We’re looking at how personal finance is changing as a result of the pandemic and one of our segments will be about debt. In a supportive way, we want to tell the story of young adults who are living with debt. If you’re willing to talk, e-mail rluciw@globeandmail.com

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Rob’s personal finance reading list …

Does your car insurer measure up?

A list of how major auto insurers are helping their customers in the pandemic. Some – but by no means all – are offering premium reductions because clients aren’t driving as much.

Falling stock markets can mess with your mind

A look at how emotions take over when stock markets fall. You feel awful when stocks plunge? Here’s why.

Where to find ‘hidden money’

Ideas on how to go through your usual household spending to find opportunities to save.

How bad could things get for dividend cuts?

An investment firm provides some reassuring analysis of how much dividends might fall as the economy slows in the pandemic by looking at past recessions. For the S&P 500, the worst drop was 25 per cent in 2007-09.

Ask Rob

Q: What sort of deductions and how much tax can we expect to pay on the Canada Emergency Response Benefit (CERB)?

A: As noted in my most recent Pandemic Personal Finance Update, CERB is taxable and must be reported on next year’s tax return. However, taxes on CERB are not deducted at source. If possible, save some of each payment to cover taxes. Deductions for Canada Pension Plan and Old Age Security do not apply because CERB payments are not employment earnings.

Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.

Today’s financial tool

Want to find out if you have a sensible mix of bonds and stocks from Canada and around the world in your portfolio? This asset allocation calculator suggests detailed portfolio mixes for various types of investors.

In case you missed these Globe and Mail personal finance-related stories

• Some households are saving money while isolating at home. What should they do with it?
• What is the right time – and the right price – to get your child their first cellphone?
• It’s a good idea to invest during bad times in Canada. Here’s the proof (for Globe Unlimited subscribers)

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