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You’ve lost your job. But the bills don’t stop. There’s rent, utilities, insurance, and now you’re wondering what to do and how long you can get by.
Managing your finances after a job loss is stressful. In an ideal world, you have an emergency fund with six to twelve months of savings. In reality, nearly half of Canadians are living paycheque to paycheque. If you have no savings to fall back on, there are ways you can pay your bills without an income.
What to do After Losing Your Job in Canada
Whether you’ve experienced a layoff, reduced hours, or a medical emergency has forced you to stop working, taking immediate action can help you avoid blowing through your savings or taking on debt. Here’s a list of actions you can take to manage your finances after a job loss.
Apply for unemployment insurance (EI) benefits
If you’ve paid unemployment premiums in this last year and meet the qualification criteria, you can apply for unemployment insurance (EI). This program provides temporary financial support while you look for a job. You can apply for EI as soon as you stop working.
In most cases, you’ll receive 55% of your average weekly insurable earnings, up to a maximum amount. You can receive EI for up to 45 weeks, depending on factors like the number of insurable hours you’ve accumulated.
Research provincial support
Many provinces offer income support programs to help pay for basic expenses like food, clothing, and shelter.
For example, Alberta offers an income support program that offers eligible individuals and families financial assistance to cover basic living expenses. British Columbia also offers an income assistance program to those who are in need and don’t have other resources.
You can also check out local resources, such as food banks, if you’re dealing with food insecurity for you or your family.
Review your budget
Reviewing a current budget or creating a new budget after job loss gives you a more realistic picture of your income and expenses. It can help you identify where you can make cuts and reprioritize your finances to avoid taking on debt.
Start by listing how much money you currently have to work with. This can include what’s in your bank account, savings, and if you bring in extra money through a part-time job or side hustle. Then, look at your essential monthly expenses. This includes your rent or mortgage, utilities, insurance, and groceries, the things you need to get by. Determine the minimum amount you need to cover your essential bills, then try to cut all non-essentials.
Cancel or pause subscriptions and memberships, see if you can reduce costs by switching to cheaper phone or internet providers, and avoid non-essential purchases.
Find ways to make money
If you’re experiencing a health issue and can’t work, consider selling items you no longer need, like clothing, electronics, or sporting equipment, online to bring in extra cash.
If you’re healthy and able to work, see if you can make money by providing ridesharing, delivery, dog-walking, housesitting, or handyman services through the gig-economy apps. As a skilled worker, you can also think about offering freelance services such as writing, graphic design, photography, bookkeeping, or virtual assistant services.
Remember, this doesn’t have to be forever, but finding a source of income as quickly as possible can help you avoid taking on debt.
While it’s possible to collect unemployment insurance while working, there are rules. If you start earning income through a side gig or freelancing, you have to report this income. You can generally keep 50 cents of your benefits for every dollar you earn, up to 90% of your previous weekly earnings. If you earn more than 90%, your benefits are deducted dollar-for-dollar.
Contact your financial institutions
If your finances are strained by job loss, contact your financial institutions as soon as possible to see how they can help you manage payments like your credit card or mortgage. Your bank or credit card issuer doesn’t want to see you default on your payments. But don’t wait, the quicker you let them know what’s going on, the more options they can provide.
For example, the Financial Consumer Agency of Canada (FCAC) sets expectations for federally regulated financial institutions to help individuals who are struggling to pay their mortgages due to exceptional circumstances.
You can also check with your credit card issuer to see if they offer a payment holiday. This is when they allow you to skip a payment, but you still have to pay interest. You can check your terms and conditions to see if this option is available, or contact your issuer.
How to Deal With Unmanageable Debt After Job Loss
Even if you’re sticking to a strict budget and collecting EI, you might find that you can’t make ends meet. If you’re drowning in debt and can’t keep up with your payments, it’s time to speak to a Licensed Insolvency Trustee (LITs).
Trustees are debt professionals who offer the widest range of debt help solutions, including formal relief options, including Consumer Proposals and Bankruptcy.
Consumer Proposal
A Consumer Proposal is a formal debt relief solution that can only be administered by a LIT. In a Proposal, you work with your LIT to create an offer to your creditors to pay a portion of your debt, extend the time you have to pay, or both.
While this is often a good option if you want to avoid Bankruptcy, it requires that you have a steady stream of income to make regular payments over time. Without a job, you might have to consider Bankruptcy.
Bankruptcy
While many people fear Bankruptcy, it’s not designed to punish; it’s meant to provide a fresh financial start. Bankruptcy can help to eliminate most of your unsecured debts, including credit cards, personal loans, payday loans, lines of credit, and more.
When you file for Bankruptcy, you also receive protection against your creditors. Actions like wage garnishment and collection calls will stop immediately. While your LIT will sell some of your assets to raise money for your creditors, you won’t lose everything. There are provincial and federal exemptions.
Need Help With Financial Recovery After Illness or Job Loss?
Managing your finances after a job loss or medical issue is challenging. Trying to figure out how to pay your bills without an income can feel incredibly stressful. If you need assistance managing your bills after a medical emergency or job loss, we can help. For a free, no-obligation consultation, call us at 1-888-371-8900, or complete our online contact form. Financial recovery is possible, and you don’t have to do it alone.
