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Come fall, financial experts expect flood of people with unmanageable debt



CERB and payment holidays by mortgage and credit companies are offering some respite, but it will all come to an end

A record-low number of personal insolvencies during the height of the pandemic in April is expected to later give way to a storm of people seeking help in the fall when they realize they can no longer make ends meet.

“I think with the banks being in co-operation with what’s going on with COVID, there’s not as much urgency to feel that fear that’s coming. The debt is going to come back and hit people pretty hard when it does,” said Katherine Kilner, with licensed insolvency trustees, Harris & Partners Inc., in Barrie, which provides bankruptcy options and consumer proposals.

“We’re expecting a significant increase in the fall.”

In a report earlier this month, Scotiabank indicated new incidences of Candian consumer and business insolvencies plunged in April following a full month of lockdown in most Canadian provinces.  

It attributed those declines to “the unprecedented support measures introduced by all levels of government and private financial institutions, as well as disruptions to the process of insolvency filings due to the COVID-19 shutdowns”.

At the same time, consumer debt loads for the first part of 2020 fell for the first time in more than a decade due to the drop in the use of credit cards, according to credit monitoring firm Equifax.

That trend was particularly noticeable among 18- to 25-year-olds.

Many Canadians are currently relying on the Canada Emergency Response Benefit (CERB) to help them through job losses resulting from the suspension of businesses during the pandemic. They are also taking advantage of payment holidays provided through banks and credit card companies.

But the temporary federal benefit doesn’t necessarily compensate people for all the wages lost. And the ability to skip credit-card and mortgage payments just defers them.

“(The mortgage holiday) doesn’t relieve the interest, it just relieves the payments for now,” said Jean Riddell, a Barrie credit counsellor with the not-for-profit Credit Canada Debt Solutions. “That could be a high-interest payment that you’re adding to your mortgage every month.” 

Most people live paycheque to paycheque, so when a crisis hits they have very little wiggle room, she says.

Riddell suggests that if anyone is or wants to skip payments it’s important to be in touch with their banks and credit-card companies. If not, the missed payment will impact the individual’s personal credit rating.

“Now we’re starting to get busy because people are going back to work and realize, ‘I have to get rid of this debt’,” she said.

Threatening letters from creditors are also starting to arrive for those who haven’t made any payments in months without seeking approval from the creditors.

Credit Canada Debt Solutions negotiates with creditors to lower or stop interest and lower monthly payments so people seeking their help can afford to pay off their debts in four or five years or less.

The advantage is the process can wipe out the interest. The disadvantage is that it also wipes out the individual’s credit rating.

Riddell suggests that cutting back on expenses and making at least the minimum monthly payments on debts will keep the credit wolves at bay. But credit counsellors can also help those who see their situation as unmanageable.

Another option is to go to an insolvency trustee who can develop a consumer proposal or bankruptcy.

Key to avoiding trouble, says Kilner, is keeping expenses to needs and not wants and adapting to reduced income levels.

Kilner asks: “How long are the banks willing to put these things on hold?”

Meanwhile, there have been reports that some people’s credit scores are taking a hit even with their creditor’s permission to take a payment holiday. Those who work in the financial industry suggest that anyone concerned about this should check their own credit report to ensure the holiday was confirmed.

Riddell and Kilner both say it’s not too early for those who are unsure about their financial well-being to reach out for an initial basic assessment. Initial consultations are free.

Riddell has already started to see an increase in calls and she expects, come September, she’ll be pretty booked up.

“I think you’re going to get a flood when CERB stops,” said Riddell. “The creditors are all going to say, ‘OK, we want our money now’. … I think it’s coming.”

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Despite Financial Strain, Harvard Not Considering Varsity Athletic Team Cuts | News




Harvard Athletics has spared its personnel and 42 NCAA Division I programs from cuts as it drastically reduces operations in the face of the COVID-19 pandemic, Director of Athletics Erin McDermott said in a Tuesday interview.

McDermott, who began her tenure as Harvard’s first female Athletics Director this summer, said she spent her first four months at the helm finding ways to make the department “austere in our operation.”

Harvard’s fields, courts, and pools now sit largely empty as a result of the coronavirus crisis. The Ivy League canceled the fall sports season and Harvard limited on-campus living to freshmen and a small share of upperclassmen this semester to curtail virus’s spread.

McDermott said the global health crisis has naturally circumscribed the department’s operations.

“Operations are so drastically different without having competition, you know, we’re not traveling teams, we’re not hosting competition,” she said. “With the student athletes that we have on campus, and with our recreational operations that we have ongoing for students and staff on campus, we’re operating really on an as need — and what’s really essential — kind of way.”

“There wasn’t really definitive, necessarily ‘cuts’ that were made,” McDermott added. “We’re just not doing all the same things that we would typically do.”

Still, the department has not broken even.

McDermott said two major sources of revenue the Athletics Department lost include the Harvard-Yale football game — which Harvard was scheduled to host next month — as well as the Boston Calling Music Festival, which takes place at the athletics complex every spring. As a result, McDermott said, a large part of her day-to-day job over the past four months has consisted of schmoozing potential donors virtually and soliciting their contributions.

Though McDermott did not state the extent of the department’s financial losses, the Faculty of Arts and Sciences — which oversees Harvard Athletics — netted more than $30 million in “unforeseen expenses and lost revenue” associated with the coronavirus as of April.

Despite financial pressures, Harvard Athletics has not cut any of its teams or fired its employees, according to McDermott.

While universities across the country — including peer schools such as Dartmouth and Stanford — have recently axed a handful of athletics programs to improve their balance sheets, McDermott said Harvard has not considered eliminating any of its 42 varsity teams — the most of any university in the country.

“There haven’t been conversations about cutting teams,” she said.

McDermott also said the department has been “fortunate” not to have to reduce its payroll, though it has adhered to the University-wide hiring freeze.

—Staff writer Ema R. Schumer can be reached at Follow her on Twitter @emaschumer.

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Millionaires’ financial decisions are different in a few surprising ways, study finds




The Canadian Press

Canadian cyclist Michael Woods wins Stage 7 of Spanish Vuelta

MADRID — Ottawa cyclist Michael Woods won the seventh stage of the Spanish Vuelta on Tuesday, finishing the hilly 159.7-kilometre route from Vitoria-Gasteiz to Valdegovía in three hours 48 minutes 16 seconds.
Woods, who finished second in Sunday’s sixth stage, improved to 48th overall with the win.
The EF Pro Cycling rider made his move to the front entering the final kilometre and finished four seconds in front of Spanish cyclists Omar Fraile (Astana) and Alejandro Valverde (Movistar) to take his second La Vuelta stage win.
“It was a special day,” Woods said. “I had a bit of luck, I had the legs and managed to get the win. I’m going to savour this one.”
Ecuador’s Richard Carapaz maintained the overall lead by finishing in the peloton, which crossed the line almost a minute later. The Ecuadorian kept an 18-second lead over Hugh Carthy, with Dan Martin and defending champion Primoz Roglic close behind. Roglic finished the stage in 19th place.
“I think we kept the situation under control,” Carapaz said. “We tried to stay calm and we knew things were not too dangerous with the finale. We tried to keep the breakaway under control and I think we finished with a good gap.”
Woods was the seventh different stage winner at the Vuelta this year.
“He played his cards and it worked well,” Fraile said of Woods.
Woods also won a stage in the 2018 edition of the race, when he joined Ryder Hesjedal as the only Canadians to claim a stage in the Vuelta, traditionally the third Grand Tour race on the calendar.
An emotional Woods outlasted the field in a demanding 157-kilometre Stage 17 of the 2018 Vuelta, dedicating the win to his stillborn son, who died earlier in the year when his wife was 37 weeks pregnant. They have since celebrated the birth of daughter Max (Maxine).
Hesjedal won stages in 2009 and 2014. He also won the Giro d’Italia in 2012, the only Canadian to win a Grand Tour event.
Woods has been on a good run of late. He finished third at the Fleche Wallonne one-day classic on Sept. 30.
Woods’ cycling resume also includes a victory in the 2019 Milano-Torino one-day race, a bronze medal in the road race at the 2018 world championships and a second place at the historic Liege-Bastogne-Liege one-day race in Belgium in 2018.
On Wednesday, riders will face a mountain stage of 164 kilometres (102 miles) from Logroño to the Alto de Moncalvillo.
The Vuelta is taking place amid tight health restrictions as Spain endures a surge in coronavirus cases. The race was postponed from earlier in the year because of the pandemic.
—With files from The Associated Press.
This report by The Canadian Press was first published Oct. 27, 2020.

The Canadian Press

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North Cowichan council members face financial ding for bad behaviour – Cowichan Valley Citizen




Council members in North Cowichan will now have to pay a financial price if found guilty of contravening the municipality’s new standards of conduct policy.

In 2018, the municipality adopted the policy which set out the expectation for council members to adhere to when carrying out their duties and functions on behalf of North Cowichan.

If a council member is accused of harassment, bullying, intimidation, violence, and/or discrimination during these times, the municipality is mandated under the policy to hire a third-party investigator to determine the validity of the accusations.

The hiring of an investigator can be a significant expense, and council decided at its meeting on Oct. 21 that when a member of council has been found to have breached the policy, he or she must contribute towards the costs of the investigation.

For the first offence, council members will receive a 10 per cent pay reduction for 12 months, which is approximately $3,000 for a councillor and $8,000 for the mayor.

A second offence will result in a 15 per cent pay reduction, but if there is any overlap between the first offence and second offence, the offending council member will see a pay reduction of 25 per cent while those periods coincide.

Council members will face a 25 per cent reduction in pay for 12 months for the third and subsequent offences, and overlapping offences within those 12 months could result in reductions of 50 per cent where there are three concurrent offences, 75 per cent for four concurrent offences, or even 100 per cent if there are five or more concurrent offences.

Mayor Al Siebring said some may say that the financial penalties are overkill, but they are a good deterrent to bad behaviour of council members.

“Without this, our code of conduct would be just symbolic, but this will add some enforcement to it,” he said.

Coun. Kate Marsh said she was impressed with the repercussions council members could face when exhibiting bad behaviour.

“One of the challenging things about the code of conduct is consequences, and a cut in pay will add teeth to it,” she said.

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