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

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

A photo illustration shows a fountain planned for Mill Lake. (City of Abbotsford photo)
UPDATED: City approves $200K fountain for Mill Lake using donated funds

Project will improve lake quality and ecosystem, say Abbotsford city staff

Linnea Labbee outside the Chilliwack Law Courts on April 1, 2021 on day 16 of her trial in BC Supreme Court where she is charged in connection with the fatal hit-and-run of a 78-year-old woman on Mary Street on Dec. 1, 2016. (Paul Henderson/ Chilliwack Progress)
Crown seeking jail time for 72-year-old Chilliwack woman found guilty in fatal hit-and-run

Trial of Linnea Labbee who struck and killed 78-year-old woman in 2016 ended Monday

The Abbotsford IHOP, shown here on April 5, is now completely removed. (John Morrow/Abbotsford News)
Abbotsford IHOP building taken down

Iconic restaurant had been on South Fraser Way for nearly 33 years

Abbotsford's Rick Hansen Secondary School is celebrating Vaisakhi virtually for 2021. (Submitted)
VIDEO: Abbotsford’s Rick Hansen Secondary School celebrates ‘Virtual Vaisakhi’

Production highlights local youth talent in anticipation of the start of annual festival on April 13

The Abbotsford Gogos are inviting local residents to watch a virtual concert in support of African grandmothers. The concert first airs on April 15. (Photo: Abbotsford Gogos Facebook page)
Abbotsford Gogos invite guests to virtual concert to support African grandmothers

Event first airs on April 15, featuring music, dance and storytelling

Burnaby MLA Raj Chouhan presides as Speaker of the B.C. legislature, which opened it spring session April 12 with a speech from the throne. THE CANADIAN PRESS
B.C. NDP promises more health care spending, business support in 2021 budget

John Horgan government to ‘carefully return to balanced budgets’

Surrey RCMP are seeking the public's help to locate three puppies stolen from a South Surrey home on April 10. (Surrey RCMP photos)
Puppies stolen during weekend break-and-enter in South Surrey

Surrey RCMP seeking public’s assistance in locating three American Bulldog puppies

A lady wears a sticker given out after receiving a COVID-19 vaccine at a clinic in Richmond, B.C., Saturday, April 10, 2021. THE CANADIAN PRESS
B.C.’s COVID-19 case count slows after last week’s peak

3,219 new cases since Friday, 18 additional deaths

North Cowichan councillor Tek Manhas did not violate the municipality’s code of conduct by posting a sexist meme on Facebook, council concludes. (File photo)
B.C. municipality to take no action against councillor who posted sexist meme

Tek Manhas’s meme doesn’t violate North Cowichan council’s code of conduct, municipality concludes

Guinevere, lovingly referred to by Jackee Sullivan and her family as Gwenny, is in need of a gynecological surgery. The family is raising money to help offset the cost of the procedure. (Jackee Sullivan/Special to Langley Advance Times)
Langley lizard’s owners raise funds for gynecological surgery

The young reptile is scheduled for operation on Tuesday

—Image: contributed
Indoor wine tastings still allowed in B.C., not considered a ‘social gathering’

“Tasting is really just part of the retail experience. The analogy I use is you wouldn’t buy a pair of pants without trying them on.”

Mounties say they “corralled” four Ford Mustangs April 4 after an officer saw the muscle cars racing down 184 Street near 53 Avenue at about 10 p.m. (File Photo)
Mounties impound four Mustangs

Surrey RCMP say they seized four cars for street racing

A sign on a shop window indicates the store is closed in Ottawa, Monday March 23, 2020. The Canadian Federation of Independent Business is raising its estimate for the number of businesses that are considering the possibility of closing permanently. THE CANADIAN PRESS/Adrian Wyld
Small business struggling amid COVID-19 pandemic looks for aid in Liberals’ budget

President Dan Kelly said it is crucial to maintain programs to help businesses to the other side of the pandemic

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Most Read