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What To Do When You Can’t Pay Your Bills
It happens sometimes. You find yourself in a situation where you can’t pay your bills and don’t know what to do.
This can be a result of losing your income or suddenly having unexpected expenses. Perhaps you got laid off from work, or maybe a surprise trip to the emergency room left you with several bills and a loss of income while you recovered.
Whatever the reason may be, there are steps you can take to get by when you’re unable to pay your bills.
In this article, I’m going to go over how to prioritize your bills when you don’t have enough to cover them all, then talk about what options you have to help you get back on track.
Let’s jump right in.
Table of Contents
1. Take Care of Your Immediate Needs
You’re at the point where you know you can’t pay all of your bills. So, which bills do you focus on? It’s important that you take care of your immediate needs. This includes your home, your food, your utilities, and your transportation.
Cover Your Home
When you can’t cover your bills, make sure you can cover your home. This means your rent or mortgage payment. If you’re having trouble keeping up with your rent or mortgage payments, here are some options.
What To Do If You Can’t Pay Your Rent
If you’re having trouble paying your rent, first have an honest conversation with your landlord. Be sure to talk to your landlord before you are late with a payment. By being upfront before being late, your landlord may be more willing to discuss options, such as a payment plan.
Discuss your situation over the phone or in writing. If your landlord will work with you, get everything in writing so that both you and your landlord are on the same page.
There are organizations that can help you when you’re having a tough time paying rent.
What To Do If You Can’t Pay Your Mortgage
If you can’t pay your mortgage, first contact your lender. Be upfront and let them know why you’re unable to make a payment, how long you anticipate having trouble paying, and details about your financial situation.
Your lender may have a program to help you so that you don’t go into foreclosure.
Next, you can call a HUD-approved housing counselor. For more information on this, check out this article at Consumer Finance.
Feed Yourself and Your Family
It’s important to eat to stay healthy. If you’re having trouble paying your bills, make sure you’re still keeping your family fed. Click here to read about how to save money on groceries.
Pay Your Utilities
Utilities such as electricity and water are necessary to live. Prioritize your utilities, such as temporarily canceling cable. If you have more than one phone line, such as a cell phone and a landline, cancel one. In short, lower your utility bills by cutting back on how you use them. This Debt.org article goes into more detail on what to do if you’re having difficulty paying your utility bills.
Ensure You Have Transportation
After taking care of your other basic needs, you’ll want to ensure you can get around, especially to work. This means paying for gasoline and your car payment if you have one. It may be helpful to cut back on how often you drive while you’re having trouble paying your bills.
2. Get On A Tight Budget
Once you’ve paid your absolute necessary expenses, it’s time to create a budget. With your budget, you can accurately determine where your money is going for each of your expenses.
After you’ve created a budget, determine if you have more expenses than you do income. If you have additional expenses, first look for ways to spend less money on things you don’t need. This could be entertainment money, money spent on going out to eat, and money on subscriptions you can cancel.
You can then use your budget to look for ways to reduce your living expenses, one category at a time. This will help you free up money to cover more of your bills.
If you’re still having trouble covering bills after doing your best to reduce expenses and cut back, you still have some options.
3. Sell What You Have To And Keep Bills Current
One way to raise money for paying off immediate bills is to sell off some of your things. Here are some examples of some things that you can sell to raise money to pay bills.
- Old phones and other electronic devices
- An old musical instrument you’re not playing anymore
- Textbooks and other books you’ve collected over the years
- Toys and games that your kids have outgrown
- Your newer car and then buy an inexpensive used car
You can only sell off so much stuff, so eventually, you’ll need to come up with a steady way to earn more income. That said, depending on what you sell – a car, for example – you may be able to last until your situation stabilizes.
4. Pick Up A Side Job To Cover Additional Expenses
Side hustles can fill in when you have an income gap or simply can’t afford to pay your bills. Having more than one source of income is especially helpful because if one source suddenly stops, you have others to fall back on.
Picking up a side or second job can be something you do long-term or simply long enough to catch up on your expenses. That said, if you want to increase your earnings long-term, a side gig is perfect for that.
However, when you have things like loan payments and credit card debt, it’s important to find ways to do your best to keep up with your payments, as skipping payments can have long-term effects. By either picking up a side hustle or having one or more already, it’ll be tougher to get in the situation where affording your bills becomes difficult.
5. Call Your Creditors
If you either can’t afford payments to creditors or you simply need more time, then you’ll want to contact your lenders, such as your mortgage and credit card companies, and discuss what options you have going forward. It’s important to do this before you miss a payment, as missing a payment can have a heavy impact on your credit score.
For mortgages and other loans, you may be able to go into forbearance. With credit card companies, you may be able to get late fees waived, interest rates temporarily reduced, or one or more payments skipped.
When you do contact a lender, you’ll want to provide the following information:
- Where you are with your finances and employment – were you recently laid off, are you looking for work, what do your total expenses look like compared to your income, and so on.
- How much you’re able to pay on your debt. If you can’t afford the minimum payment, what is something that you’re able to afford.
- How long you believe your situation will continue before you can start making regular payments again.
- Details about how much money you’re making and a picture of your assets and overall monthly expenses and liabilities.
If you feel you may be unable to pay your bills, communication is important. Simply letting your bills’ due date pass without reaching out to your creditors will hurt you more than explaining your situation and working something out.
6. Consider Credit Counseling
Another option to take into consideration when paying bills becomes difficult is to seek credit counseling. A reputable credit counseling organization will generally be non-profit, and they can assist you with your current financial situation.
A credit counselor can help you create a budget and go over options with you. They can help you talk to and negotiate repayment options with your creditors. They may discuss things such as debt consolidation and debt settlement, depending on where you are in your current situation.
Always check the credentials of a credit counselor before working with them. For example, check if they’re affiliated with the National Foundation for Credit Counseling (NFCC) and the Financial Counseling Association of America (FCAA). Ask questions when you call the organization and make sure you feel comfortable when discussing your situation.
NerdWallet has a great article on steps to take when choosing a credit counselor.
Wrapping It Up
In this article, we discussed what to do when you can’t pay your bills. We went over different options you have, including:
- What bills to cover first
- Getting on a budget to identify where you can cut back
- Selling off things to help raise money
- Getting a side hustle or second job to increase earnings
- Calling your creditors to make arrangements for repayment
- Considering credit counseling to better improve your situation
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