Managing your money in challenging times

Facing financial difficulties

You may be experiencing financial difficulties.

This may be due to unexpected situations, such as:

• a loss or reduction of income
• unexpected expenses
• changes in the economic context like:
  • a higher cost of living
  • increasing interest rates

Learn how to manage your money when interest rates rise.

Unexpected situations may affect your ability to pay for your living expenses and your debts. You may use interactive tools and calculators to help you manage your money during difficult times.

Find the financial tools and calculators to help you manage your money.

Improving your financial situation

There are steps you may take to improve your financial situation when facing financial difficulties.

Create a budget

Making a budget helps you manage your money. It allows you to identify areas where you may cut back or adjust your expenses.

Learn how to make a budget.

Reduce your expenses

Reducing your expenses may help you limit financial difficulties. Eliminate your non-essential spending where you can.

Find ways to save money before shopping.

Make a plan to pay off your debt

Making a plan to pay off your debt will help you achieve your financial goals. Decide on a strategy based on the types of debt and the amount you owe.

Learn how to make a plan to manage your debt.

Avoid taking on more debt

During difficult times, having debt can add stress to an already stressful situation. Before borrowing more money, consider all your options.

If borrowing is necessary, make sure you understand the costs before making your decision. Some credit products are more expensive than others because of their high interest rates and fees.

Learn more about choosing financial products and services that are right for you.

You should only borrow the amount you need.

Learn more about what to consider before borrowing money.

Increase your income

Identifying ways you can increase your income may help reduce stress and help you meet your financial goals. Make sure you manage this extra income wisely. Make a budget and use the extra money to pay down your debts.

Set up an emergency fund

An emergency fund is money you set aside to pay for unexpected expenses. If you don’t have an emergency fund, try putting some money aside if possible. You never know when an emergency may happen. You may need to rely on an emergency fund sooner than expected.

Learn how to set up and manage an emergency fund.

Getting help from your financial institution

If you’re experiencing financial difficulties, contact your financial institution as soon as possible. You may have questions or concerns about the impact of difficult times on your financial products.

These may include your:

• mortgage
• credit card

Your financial institution may be able to help you. The earlier they understand your situation, the more options could be available to you.

Contact your financial institution to find out what options are available to you.

Explore mortgage relief options

Your financial institution may offer mortgage relief options.

If you’re experiencing financial difficulties due to exceptional circumstances, consider your options now. Read your mortgage contract and contact your financial institution to ask about your options. You may be eligible for one, or a combination of the options they offer.

Keep in mind that if you make changes to your mortgage contract, you may need to pay fees.

Find out more about mortgage relief options.

Consider payment holidays on your credit card

Your credit card issuer may offer you a payment holiday. This means they let you skip a payment. However, you still pay interest.

Learn more about payment holidays.

Ask to lower your credit card interest rate

Your financial institution may be able to temporarily reduce the interest rate on your credit card. Terms and conditions may vary depending on the financial institution. Contact your financial institution to see if this option is available to you.

Getting help from a financial professional

Whatever the source, financial difficulties can be stressful for you and your family. Emotional situations can lead to poor financial decisions. Consider getting the help of a professional.

Different types of professionals offer different types of help. Make sure you get the right type of help for your needs. Seek advice from reliable and trusted sources to explore your options.

Financial advisors

“Financial advisor” is a general term for someone who helps you manage your money. Examples include an employee of your financial institution, an investment broker or an insurance agent.

They may:

• help you assess your financial situation
• give you advice on the financial products that are right for you

Learn more about choosing a financial advisor.

Credit counsellors

Credit counsellors provide advice and education on managing debt, budgeting, and improving credit. Both not-for-profit organizations and for-profit companies offer credit counselling services.

Learn more about getting help from a credit counsellor.

Debt consolidation companies

Debt consolidation companies offer loans to combine multiple debts into a single payment. This may help you simplify your debt management and reduce your monthly payments.

Learn more about consolidating your debts.

Debt settlement companies

Debt settlement companies negotiate with your creditors to reduce the total amount of debt you owe. They offer to settle your debts for less than the full amount.

If your creditors accept the offer, you must pay your debt settlement company. The debt settlement company will then pay your creditors.

Learn more about using a debt settlement company.

Licensed insolvency trustees

Licensed Insolvency Trustees (LITs) are federally regulated professionals. They may provide you with advice and services if you have debt problems.

LITs may help you make informed choices to deal with your financial difficulties. They’re the only professionals authorized to administer consumer proposals and bankruptcies.

Learn more about Licensed Insolvency Trustees.

Consumer proposals

A consumer proposal is a legally binding agreement administered by a LIT. It allows you to pay back a portion of your debt, often without losing your assets. This is an alternative to bankruptcy and can be less damaging to your credit.

Learn more about consumer proposals.

Bankruptcy

Bankruptcy is a legal process where you declare that you can’t repay your debts. It involves surrendering your assets to a LIT who will distribute them to your creditors. Bankruptcy can discharge most unsecured debts but will significantly impact your credit score for several years.

Learn more about bankruptcy.

Dealing with debt collectors

A debt collection agency is a company that specializes in recovering unpaid debts. If you don't make your debt payments, a debt collector may contact you. Their objective is to collect money you owe on a credit card, line of credit, or loan.

You have the right to fair treatment and to dispute a debt if you believe it’s incorrect.

Learn more about dealing with a debt collector.

Rebuilding your credit

Your credit report is a summary of your credit history.

Learn how to get your credit report and score.

Your creditors may report missed payments to your credit report. Missing payments may have a negative impact on your credit history. Rebuilding your credit is important. It may help you borrow money or apply for credit in the future.

Learn more about improving your credit score.

Secured credit cards

If you have poor credit or no credit, consider applying for a secured credit card. This type of card requires a security deposit, which acts as your credit limit. Using it responsibly can help rebuild your credit.

Learn more about secured credit cards.

Related links

• Financial Goal Calculator
• Budget Planner
• Filing a complaint about financial products and services