With the grace period over, creditors have started knocking again on the doors of those to whom they have granted loans. There are more and more requests for bankruptcy trustees and we expect the coming weeks to be particularly busy.
“When the pandemic arrived, the number of bankruptcies fell drastically,” indicates Éric Pronovost of Roy Métivier Roberge, licensed insolvency trustee. The explanation for this is simple. The government and financial institutions have allowed people to defer their payments. In May-June, the number of bankruptcies was half the number compared to previous years. ”
This momentary tranquility is a thing of the past, however. Since October, complaints have resumed. Back to the wall, some people are turning to bankruptcy trustees to keep their heads above water.
“People have to start paying their debts again and the number of calls is increasing,” notes Pronovost. For the months of January and February, we expect to process a significant volume of requests. Experts even predict that the number of bankruptcies will be six times higher than in the past. It is to be continued. I don’t know if it will be that much worse, but it will definitely be higher. ”
In recent weeks, more and more people have called on trustees to adjust their budgets and find solutions. “Currently, we are doing a lot of help with the budget. These are not all people who are in a situation of bankruptcy, but they consult precisely so as not to go there, ”says Pierre Fortin, trustee and president of Jean Fortin & Associés Syndics Inc.
“People who had financial problems during the pandemic still have them,” he adds. Those who were facing the wall only saw the wall move back, but the wall is still there and it is getting closer. ”
The grace period granted by creditors has also allowed many people to review their budgets and take the necessary actions to avoid bankruptcy. “This summer, we handled fewer cases than usual, but there are still people who took advantage of the deferral of payments to make a game plan,” says Mr. Fortin. There are a lot of people who were concerned about the resumption of payments who came to see us in anticipation of this. ”
“Once in two, their situation was not so bad,” continues the latter. Often it was simply a matter of re-budgeting. We saw a lot of worried and anxious people and that allowed them to play down. We looked at the options with them and if they follow the plan, everything will be fine. Bankruptcy is really the last resort and there are several things you can do before you get there. ”
Mr. Fortin recalls that the amount dedicated to debt repayments must not exceed 15% of a person’s net income. Otherwise, if the situation continues, financial problems will arise.