How To: Receive financial aid after unexpected events

Seeking Financial Help 

Have you run into some unexpected circumstances and are in need of financial assistance? Despite the initial struggles you may have with your bank, there are several options for you.

Most financial institutions do not have established programs for people who are experiencing money problems due to hardships including the loss of a spouse, getting laid off a job, diagnosis of a major illness, dealing with the aftermath of a natural disaster, or just getting too deep into your debt.

If you find yourself in one of these situations, do not panic! Listed below are solutions to pay off your biggest bills.

Credit Cards Payments

Debt Management Program (DMP)

Unfortunately there is no way for a financial institution to magically make your credit card debt disappear however, they can refer you to a credit counselling agency that will guide you through the steps required to effectively tackle your debt. If you qualify for the Debt Management Program (DMP), a counsellor will create a tight budget that consolidates your debts into manageable monthly payments. Think this is the best option for you? Contact your bank or fill out an application on Loans Canada.

Orderly Payment of Debt Program (OPD)

Alberta residents have access to the Orderly Payment of Debt Program (OPD) which allows you to pay back the entire amount of your debt over a 3-year period. Yes, this sounds overwhelming however, your interest rate will be set at a solid 5%. To get into this program, you will need the thumbs up from your creditors and the court system. For more information, contact a local financial trustee who can answer all of your questions.

Mortgage Payments

Have you missed a mortgage payment but are insured by the Canada Mortgage & Housing Corporation (CMHC) or Genworth? You are in luck! Each company has a financial hardship program to help keep you in your Home while you work through the challenges you are experiencing.

The "Default Management Program" is provided by the CMHC while Genworth's program is called the "Homeowner Assistance Program." Ask your lender whether or not these programs can help you out.

If you are not insured, you may have the option to use the equity from your Home to refinance. From there, you can organize a new payment plan that is more suited to your situation. By paying more in a shorter amount of time, you can potentially dodge the refinance option and get back on track.

Other Payments

Access Pension Funds

In dire situations, you may need to dive into your retirement savings. First, you must fill out the online application and submit to your financial institution that holds your locked-in account.

Your bank, credit union, trust company or insurance will review your application based on the Employment Pension Plans Act (EPPA) and Regulation.

Access RRSP Funds

It is possible to take money out of your RRSP before you retire but you will pay an immediate tax on those funds as well as eliminate the original contribution room you had before the money was taken out of the account.

Immediate Tax Withhold

Your bank will automatically hold back the tax on the amount you take out. They will directly pay the government on your behalf.

The withholding tax rate percentage for Alberta is as follows:

  • Withdrawing up to $5,000: 10%
  • Withdrawing between $5,000-15,000: 20%
  • Withdrawing more than $15,000: 30%

(ex. You want to take out $15,000 from your RRSP. After the 20% withholding tax ($3,000), you will receive $12,000.)

Taxable Income

Once the money is out of the account, you will have to report the exact amount and put it on your next tax return as regular income.

Dealing with your RRSP account can be tricky. The Government of Canada website will tell you how to properly withdraw funds from your RRSP.

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It's okay to ask for help when you're in a difficult situation. Lean on others for strength and guidance while you get back on track financially. 

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