A financial crisis can be very stressful, whether it’s caused by the loss of income because of unemployment, an illness in the family, a disability, the death of a partner, or a medical or legal emergency. It’s important to remember that help is available. Following are resources and information on what to do if you are facing a financial emergency.
What to do in a financial emergency
Here are steps to take in a financial emergency:
Ask someone you trust to help you assess your situation. You may feel overwhelmed in a financial emergency.
A knowledgeable friend, relative, or adviser can help you put things in perspective and come up with a plan of action.
Don’t panic. Don’t start impulsively selling off your assets. Other forms of help may be available.
Make a list of your bills and debts and prioritize them, with housing at the top of the list. Your goal is to stay in your current housing while still meeting your family’s basic needs.
Prioritize your bills according to their importance and the results of late payments.
Contact your creditors. If your income won’t cover your expenses, negotiate immediately with utilities, creditors, and others you must pay. Ask for smaller payments and more time to pay. Most creditors will try to work with you.
Cut expenses. Economize in every way you can. Consider reducing or eliminating cable TV or streaming services. Don’t go out for dinner, and put off nonessential purchases. Conserve electricity. Turn thermostats down in the winter and up in the summer. Consider buying groceries and household supplies in bulk. Take advantage of sales, coupons, and BOGOs (buy one, get one free deals).
Pay at least a small amount on each bill every month. Never skip a bill. Even a small payment is a gesture of good faith that can keep collection agencies at bay.
Talk with a credit counsellor.Credit counselling services may be companies or nonprofit groups. They provide personalized help to people who need to pay off unsecured consumer debt, such as credit card and utility bills. They offer solutions that may range from education about budgeting to negotiating repayment plans with creditors on your behalf, and then managing the agreed-upon payments. Look for an agency that’s affiliated with Credit Counselling Canada and/or with a credit counselling association in your province. Also check the agency’s online client reviews and its record with the Better Business Bureau.
In a financial emergency, your first priority is to keep a roof over your head with adequate heat, water, and electricity.
Paying your rent or mortgage. Contact your landlord or mortgage lender before your next payment is due. They’re often motivated to help. Negotiating a new temporary payment plan costs less than eviction or foreclosure.
Restructure your rent payments. Ask your landlord if you can make smaller payments for a month or two, or ask if you can skip a payment. Say that you will repay the difference when your financial emergency is resolved. Or offer to provide a service, such as painting your apartment, in exchange for rent.
Refinance your mortgage payment, or obtain a forbearance. You can reduce your monthly payment by refinancing with a lower interest rate or for a longer term, but make sure you can afford the closing costs. Ask your lender about a forbearance agreement that would let you postpone payments or make partial payments for a specified period of time. For more details on these options, see Ratehub’s website (www.ratehub.ca/mortgage-refinance).
Investigate community resources that provide rent or mortgage assistance. Many communities have foreclosure-prevention programs or nonprofit groups that offer cash assistance for rent and mortgage payments. Contact your town’s city hall, United Way’s 211 help line or website (http://www.211.ca), or a faith community to learn more.
Paying your utility bills. Utility bills for electricity, gas, water, or oil can add up quickly, particularly in the winter. Payment plans can help you manage the cost fluctuations, and energy assistance programs can help pay your bill.
And in many regions, it’s illegal to disconnect heat and electricity services during the winter months, regardless of unpaid bills. Contact each utility provider’s billing or credit office to discuss the following or other alternatives:
Request a new payment plan.Ask if your annual energy costs can be divided into equal monthly payments (known as a “level billing” plan) or reduced via subsidies to help you pay your bill in high-usage months. Try to negotiate a monthly sum that ensures continued service while you slowly tackle older bills.
Apply for federal, provincial, or local assistance.Some regions have government programs to help you pay utility bills and other expenses during a period of financial hardship. For example, the Ontario Electricity Support Program or Manitoba’s Employment and Income Assistance (EIA) program.
Seek help from private energy assistance programs.They offer one-time cash help to people who don’t qualify for federal or state programs. The Salvation Army’s Good Neighbour Energy Fund program, for example, helps covers utility expenses. Also, many utility companies set aside funds for grants or loans to customers who can’t pay their bills. Contact the utility provider’s billing office for more information.
Free or discounted food is one of the easiest forms of relief you can get in a financial emergency. If you can reduce your food and meal expenses, you can put the money you save toward other bills.
Find distributors of free food in your community.Food banks and pantries offer free uncooked food you can take home. Search online using the name of your province, territory, or community and “food pantry” or “food bank” to find these resources in your area.
Apply for free or discounted school meals.Meal programs, some supported by provincial and municipal governments, are available in some areas. Contact your child’s school for more information.
A medical emergency can cause a financial crisis. Even if money is tight or you don’t have private health insurance, you can obtain preventive and acute care through Medicare, Canada's publicly funded health care system. Instead of a single national plan for citizens, the individual provinces and territories administer their own health care insurance plans.
Certain types of care are not generally covered under the publicly funded health care system: vision, non-emergency dental, some prescription drugs, ambulance services, and home care. However, there are differences in each region’s coverage plan, so be sure to ask. The provinces and territories also provide supplemental coverage to certain groups of people. These include seniors, children, the Inuit, eligible veterans, serving members of the Canadian Forces, First Nations people living on reserves, social assistance recipients, and some groups of refugee claimants, among others.
If you don’t have private health insurance, and it doesn’t look like your region covers the services you need, don’t give up. Keep advocating for your family’s health needs. Talk to the officials at your local public health clinic. There’s often something that can be done for your family in an emergency. And remember to take care of yourself, too.
Don't neglect your health during a financial crisis.
Automotive repair and maintenance can be expensive, but it’s essential for those who need their vehicle to get to work. Local churches or charities may be able to help. Another strategy is to see if a local high school or technical college offers discounted auto repair services through their auto-mechanic training programs.
Contact your provincial legal aid society to find free or reduced-rate legal-aid programs available in your area. Services may be available for family, criminal, and other legal areas.
Help hotlines.These services provide free and immediate advice, information, and referrals over the phone. None provide ongoing legal representation, but they can refer you to a free or low-cost lawyer.
Attorney referral services.These services match you with attorneys that are qualified to handle your legal problems. The referral is free and the initial consultation might be, too. But the lawyer will charge for work beyond that, unless you negotiate free services.
Legal clinics.In these programs, attorneys, law students, and paralegals provide free legal advice or representation to eligible clients. They may provide advice on a wide range of legal issues, including bankruptcy, domestic abuse, landlord-tenant problems, health insurance issues, and more. Some clinics represent clients in court; others don’t. Many legal clinics are affiliated with law schools. Call the law school nearest you to find out if it has one. If not, the administration should be able to tell you how to find a legal clinic in your area.
