{"id":1304,"date":"2021-11-03T09:10:13","date_gmt":"2021-11-03T14:10:13","guid":{"rendered":"https:\/\/www.creditaid.ca\/blog\/?p=1304"},"modified":"2025-06-17T11:55:12","modified_gmt":"2025-06-17T16:55:12","slug":"how-covid-19-affected-household-debt","status":"publish","type":"post","link":"https:\/\/www.creditaid.ca\/blog\/2021\/11\/03\/how-covid-19-affected-household-debt\/","title":{"rendered":"How COVID-19 Affected Household Debt"},"content":{"rendered":"\n

You\u2019ve likely heard how COVID-19 affected millions of household incomes, but what about debt levels<\/strong>? Household debt has reached extraordinary levels, but not for everyone. Its largest stronghold is on the middle-income earners \u2013 the households that lost their jobs during the pandemic and who didn\u2019t benefit enough from CERB payments.<\/p>\n\n\n\n

Here\u2019s what happened.<\/p>\n\n\n\n\n\n\n\n

The Government Assistance wasn\u2019t Enough<\/strong><\/h2>\n\n\n\n

The biggest problem for middle-income earners (earning $500 – $1,199 per week) was that the CERB payments weren\u2019t enough to make up for their lost income.<\/p>\n\n\n\n

What did this mean?<\/p>\n\n\n\n

It had a couple of downsides.<\/p>\n\n\n\n

First, middle-income earners couldn\u2019t make ends meet. If they lost their job or even if they got it back, with the assistance the government provided employers, it wasn\u2019t enough to fill the gap. While they tried to make ends meet, they used credit cards to supplement that income at exponential rates.<\/p>\n\n\n\n

Second, middle-income earners didn\u2019t file for insolvency<\/strong>. It sounds like a good problem, but it wasn\u2019t. CERB payments couldn\u2019t be garnished. This meant middle-income families didn\u2019t have to worry about losing their income if they filed insolvency.<\/p>\n\n\n\n

But income levels have not returned to their \u2018norm\u2019 yet, which leaves middle-income families stuck without enough income.<\/p>\n\n\n\n

Debt Deferrals Backfired<\/strong><\/h2>\n\n\n\n

Another problem was the vast amount of debt deferrals<\/strong> households used. A mortgage deferral is a common request even outside a pandemic. However, personal debt deferrals became a common thing during the pandemic too.<\/p>\n\n\n\n

Here\u2019s the problem.<\/p>\n\n\n\n

It\u2019s only a temporary fix. Eventually, the loan payments<\/strong> become due again as does the deferred interest and payments. Some lenders tack the unpaid debt onto the back of the loan, but this either lengthens the term or increases the payment amount.<\/p>\n\n\n\n

What Does the Future Look Like?<\/strong><\/h2>\n\n\n\n

Everyone wants to know, what\u2019s next? How do you bounce back from such high levels of debt?<\/p>\n\n\n\n

The key is to take it slow. You aren\u2019t going to get out of debt in one fell swoop. It will take time, especially if you racked up more debt just trying to make ends meet.<\/p>\n\n\n\n

As we work through the remainder of the pandemic, work with a credit counsellor<\/a> to get your way out of debt. Insolvency isn\u2019t the only answer. There are ways to get out, but you need a plan. Just trying to randomly pay debts and hope for the best simply won\u2019t work.<\/p>\n\n\n\n

You need a concrete plan that\u2019s affordable and that you can follow well so you get yourself out of debt. You need to take action now.<\/p>\n\n\n\n

Final Thoughts<\/strong><\/h2>\n\n\n\n

While household debt is much higher due to the pandemic, it\u2019s not insurmountable. Working with your creditors and creating a plan is the best way to see your way out. If you\u2019re still looking for a job or trying to get your income back to pre-pandemic levels, have patience.<\/p>\n\n\n\n

Don\u2019t ignore your debts and\/or your creditors. Stay in contact with them, let them know what\u2019s going on, and ask how they can help.<\/p>\n\n\n\n

Chances are you\u2019ll get more help than you realized, but the bottom line is you must work your way out of the debt eventually or the interest charges will just keep accumulating.<\/p>\n\n\n\n

If you need advice on establishing a household budget, contact us<\/a> for a free consultation with a Credit Counselor<\/a> today!<\/p>\n","protected":false},"excerpt":{"rendered":"

You\u2019ve likely heard how COVID-19 affected millions of household incomes, but what about debt levels? Household debt has reached extraordinary levels, but not for everyone. Its largest stronghold is on the middle-income earners \u2013 the households that lost their jobs during the pandemic and who didn\u2019t benefit enough from CERB payments. Here\u2019s what happened.<\/p>\n","protected":false},"author":4,"featured_media":1305,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,8,9],"tags":[107,146,153,309],"_links":{"self":[{"href":"https:\/\/www.creditaid.ca\/blog\/wp-json\/wp\/v2\/posts\/1304"}],"collection":[{"href":"https:\/\/www.creditaid.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.creditaid.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.creditaid.ca\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.creditaid.ca\/blog\/wp-json\/wp\/v2\/comments?post=1304"}],"version-history":[{"count":1,"href":"https:\/\/www.creditaid.ca\/blog\/wp-json\/wp\/v2\/posts\/1304\/revisions"}],"predecessor-version":[{"id":1306,"href":"https:\/\/www.creditaid.ca\/blog\/wp-json\/wp\/v2\/posts\/1304\/revisions\/1306"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.creditaid.ca\/blog\/wp-json\/wp\/v2\/media\/1305"}],"wp:attachment":[{"href":"https:\/\/www.creditaid.ca\/blog\/wp-json\/wp\/v2\/media?parent=1304"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.creditaid.ca\/blog\/wp-json\/wp\/v2\/categories?post=1304"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.creditaid.ca\/blog\/wp-json\/wp\/v2\/tags?post=1304"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}