Businesses are getting creative to keep cash flowing. (File photo)

Businesses are getting creative to keep cash flowing. (File photo)

Expect debt collections activity to pick up as economy reopens: experts

Credit Canada and Equifax both say there are already signs of increasing credit delinquencies

Credit experts say Canadian consumers who are in debt should prepare for collections agencies to ramp up their activity as the economy reopens.

Credit Canada, a non-profit credit counselling organization, said Canadian debt collectors have reduced collections efforts over the past year, largely because of deferral programs that were offered to consumers during the pandemic.

“None of the creditors wanted to be accused of being aggressive with collections during the pandemic,” said Keith Emery, chief operating officer of Credit Canada, who said creditors wanted to be conscientious about putting undue pressure on Canadians.

His organization saw a roughly 30 per cent drop in demand for their credit counselling services, but Emery said there are signs of collections resuming in recent months, and that consumers should expect that forgiveness to end when deferral programs start finishing.

“We are already starting to see a slight uptick in activity.”

Data from Equifax showed that only 24 per cent of debt-ridden Canadians who accessed deferral programs this year used the breathing room to improve their credit situation.

While people who are in debt might have some time yet until collections agencies start coming for them, Emery says it’s imperative that Canadians start preparing now to put themselves in a better position to repay any outstanding debts.

“One thing we’ve noticed during the pandemic is a lot of clients have been unwilling to take action on their situation, so they might be carrying debt because… they didn’t feel any pressure to be proactive,” said Emery.

“If that mindset continues and people continue to say ‘I’m not going to do anything until I’m absolutely forced to,’ we’ll definitely hear a lot more stories about collectors.”’

Calls and emails to five collections agencies across Canada from The Canadian Press went unanswered.

Credit Canada and Equifax both say there are already signs of increasing credit delinquencies and action from debt collectors from the end of 2020.

“We would expect that to increase again as the economy reopens,” said Rebecca Oakes, assistant vice president of advanced analytics at Equifax Canada.

She said Canadians who are concerned about their debt having an effect on their credit score should try to at least make minimum payments on all of their accounts.

“Consumers can look at their credit reports free of charge in order to understand which of their accounts are reported to the credit bureau and may affect their credit scores,” said Oakes.

Oakes and Emery also advised Canadians who are struggling with debt to consult with a not-for-profit debt counselling agency, which can often provide their services for free or at a low cost.

If your debt goes to collections, Emery said a counselling agency can ensure you know your rights while helping negotiate a repayment plan.

“There are a lot of rules about what debt collectors can do, but if you don’t know what those rules are then they will exploit your ignorance,” said Emery.

“The No. 1 thing that people can arm themselves with is knowledge.”

He said collections agencies have restrictions around how often they can contact you, what they can discuss if they contact your friends and family, and about the use of threatening language if they contact you.

Debt collectors will also be reluctant to set up a payment plan because it’s in their interest to receive all the owed money at once, said Emery.

That’s where a counselling agency can negotiate on your behalf to help slowly repay your debts.

Ultimately, Emery says consumers will have to face their debts at some point, and said it’s better to act sooner than later.

“You do have to take action, burying your head in the sand is not going to work,” said Emery.

“If you want to build a financial future then you want to get this stuff out of the way.”

Salmaan Farooqui, The Canadian Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

CoronavirusDebt

Just Posted

Recreation therapy staff Karen Baker and Jenessa Dunkle dressed up for the tea on the Titanic, held on the 109th anniversary of the sinking of the vessel.
photo submitted
109 years after the sinking, the Titanic disaster is still remembered in Castor

Residents of Castor’s long term care facility were treated to an immersive celebration of the vessel

Alberta’a chief medical officer of health Dr. Deena Hinshaw said Thursday that there are more than 328,000 vaccine appointments booked over the next seven days. (Photo by Chris Schwarz/Government of Alberta)
Alberta surpasses 2 million doses administered of COVID-19 vaccine

Red Deer down to 835 active cases of COVID-19

Alberta Premier Jason Kenney arrives at the 2021 budget in Edmonton, Thursday, Feb. 25, 2021.
‘We did not unite around blind loyalty to one man’:Kenney faces internal call to quit

Senior backbench member Todd Loewen, in a letter posted on Facebook, called on Kenney to resign

Alberta continues to wrestle with high COVID-19 case numbers. (NIAID-RML via AP)
Red Deer up to 858 active cases of COVID-19

Province reports additional 1,799 cases of the virus

Marc Kielburger, screen left, and Craig Kielburger, screen right, appear as witnesses via video conference during a House of Commons finance committee in the Wellington Building in Ottawa on Tuesday, July 28, 2020. The committee is looking into Government Spending, WE Charity and the Canada Student Service Grant. THE CANADIAN PRESS/Sean Kilpatrick
Trudeau didn’t violate conflict rules over WE Charity, watchdog says

Federal ethics commissioner Mario Dion found that former finance minister Bill Morneau did violate the rules

Chris Scott, owner of The Whistle Stop Cafe, was put in handcuffs after an anti-restriction protest Saturday in the parking lot of the business. (Screenshot via The Whistle Stop Facebook page)
Alberta RCMP investigating possible threat to police after Mirror rally

Online images show RCMP members, vehicles in crosshairs of a rifle

An Israeli attack helicopter launches flares as he flies over the Israeli Gaza border, southern Israel, Thursday, May 13, 2021. (AP Photo/Ariel Schalit)
Singh calls for halt on Canadian arms sales to Israel as violence escalates in region

Government data shows Canada sent $13.7 million in military goods and technology to Israel in 2019

New homes are built in a housing construction development in the west-end of Ottawa on Thursday, May 6, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Budget’s foreign-homebuyers tax could bring in $509 million over 4 years, PBO says

Liberals are proposing a one per cent tax on vacant homes owned by foreign non-residents

A Canadian flag patch is shown on a soldier’s shoulder in Trenton, Ont., on Thursday, Oct. 16, 2014. The Canadian Forces says it has charged one of its members in the death of an army reservist from British Columbia during a training exercise at a military base in Alberta last year. THE CANADIAN PRESS/Lars Hagberg
Canadian Forces member charged in death of army reservist during training exercise

Cpl. Lars Callsen has been charged with one count of negligence

A youth plays basketball in an otherwise quiet court in Toronto on Saturday April 17, 2021. The Canadian Civil Liberties Association is urging the federal and provincial governments to fight COVID-19 pandemic by focusing on proven public health policy interventions including paid sick leave, and education rather than punitive enforcement measures. THE CANADIAN PRESS/Chris Young
Provinces issued more COVID-19 tickets during 2nd wave: CCLA report

‘A pandemic is a public health, not a public order, crisis,’ reads the report

Prime Minister Justin Trudeau holds a press conference in Ottawa on Tuesday, May 11, 2021. Trudeau is rejecting accusations from Alberta’s justice minister that his federal government is part of a trio rooting for that province’s health system to collapse due to COVID-19. THE CANADIAN PRESS/Sean Kilpatrick
Alberta justice minister sorry for saying feds, others rooting for COVID disaster

Earlier Tuesday, prior to Madu’s apology, Trudeau rejected the accusations

In this Monday, March 15, 2021 file photo a vial of AstraZeneca vaccine is pictured in a pharmacy in Boulogne Billancourt, outside Paris. Questions remained Wednesday about the future of the Oxford-AstraZeneca vaccine in Canada, as Manitoba limited use of the shot and Ontario announced it planned to save an incoming shipment to use as second doses. THE CANADIAN PRESS/AP/Christophe Ena, File
Questions remain about the future of the Oxford-AstraZeneca shot in Canada

More than two million Canadians have received AstraZeneca and 17 have been confirmed to have VITT

Most Read