Ten Steps...What To Do When You Can't Pay Your Bills (2024)
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Life is full of surprises, but bills don't seem to care. They keep rolling in,even if you've lost your job, fallen ill, encountered unexpected household expenses...orsimply lived a bit above your means. Your financial crunch may be temporary, butyour credit record is enduring...and overdue bills can haunt you for years tocome.
What can you do if you're having difficulty paying your bills? Here are a fewsuggestions:
1)
No matter how tempting, trying to ignore a mounting pile of bills is the worst thing you could do. You'll end up with late fees, interest charges...and a ruined credit rating. Don't stick your head in the sand.
2)
While these may be effective, the concept of borrowing money to clear up obligations is not considered to be a generally sound approach. In many instances, it simply pushes the problem a few months or years into the future. Remember, you cannot borrow your way out of debt. Be wary of debt consolidation plans.
3)
to help pinpoint your current situation in terms of assets and liabilities and help identify possible steps you can take. You may want to use a simple note pad. However, it is recommended that you obtain a pre-printed form, which will allow you to record complete information. These are available from your local financial institution or your insurance agent. Complete a personal balance sheet
4)
Include credit cards, rent or mortgage, electricity, phone, car payments, college loans, insurance. Make a separate list all of your bills and amounts you owe each month.
5)
Calculate how you could pay each bill on a revised schedule...perhaps paying smaller amounts over a longer time period, or until your financial picture changes. If your finances are out of control, contact a consumer credit counseling agency. However, avoid "debt doctors," who often claim they can erase your credit history for a fee. Develop a strategy for debt repayment.
6)
Remember, if they do not know your situation, you could end up in court. So, with smaller, local organizations that know you personably, pick up the phone and call. Explain your situation and discuss options. The idea is to take the initiative by presenting your plan for repayment. You may be pleasantly surprised at the positive response. Creditors will appreciate your concern...and you'll be more likely to receive revised terms designed for your personal financial situation. Contact the people you owe.
The same goes for dealing with larger, national creditors. Call first and talk to someone in the customer service department. Stress your interest in paying off the debt and ask about options. Remember, most companies have no more desire to lose a customer than you do to avoid your bills. The key is communication. Important: Be sure to get names (first and last) of the people to whom you talk, as well as direct phone numbers. Not only does this help you track them down again, but it also helps build a relationship.
7)
A verbal okay to debt restructuring is fine. But it still needs to be on record. Whether dealing with a large or a small organization, a written agreement may be all you have to prove that a revised repayment schedule was okayed. Get all agreements in writing.
8)
to verify that your record remains clean and that it contains no blots. Also, you have the right to add a statement to your credit record explaining any discrepancies or disputes. Contact the credit bureau
9)
Your medical insurance and homeowner's coverage provides valuable protection. The same goes for your life insurance. If you are having difficulty paying your premiums, contact your agent to discuss the options available. Don't let your insurance policies lapse.
10)
Last year, a record 1.3 million American consumers and businesses declared bankruptcy. But that doesn't mean it should be considered an easy alternative to paying bills. Under bankruptcy laws, debts do not miraculously disappear without penalty. Bankruptcy will remain on your credit record for ten years. Avoid it if you can. Only declare bankruptcy as a last resort.
Call first and talk to someone in the customer service department. Stress your interest in paying off the debt and ask about options. Remember, most companies have no more desire to lose a customer than you do to avoid your bills. The key is communication.
Step One: Prioritize Your Bills. Some bills can be temporarily put off without severe negative consequences, while other missed payments can quickly lead to disaster. ...
True, if you're unable to pay bills, start by preparing by organizing your bills and figuring out how much you can pay. Then, negotiate with creditors and make payments. Finally, check your free credit report to make sure debt payments are being recorded accurately.
Which Bills Should Be Paid First? Generally, the bills you should pay first are the ones that cover necessities — the main resources that keep you and your family safe and healthy. These necessities include shelter, water, heat and food. Once necessities are paid for, focus on expenses related to your vehicle.
Depending on the bill, if you fall behind on payments, there can be many repercussions, including late fees, higher interest rates, repossession of your car, foreclosure on your home, and damage to your credit score.
The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).
If your account does not contain sufficient funds to cover the payment, any overdraft protection you may have on the account will be used. If you still do not have enough funds to cover the payment(s), you will be charged a fee for insufficient funds (NSF).
Explain your current situation. Tell them your family income is reduced and you are not able to keep up with your payments. Frankly discuss your future income prospects so you and your creditors can figure out solutions to the problem.
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