Sometimes, life doesn’t go the way you planned. Your utility bill goes up, your car breaks down, your rent rises with the market or some other unexpected situation arises.
For a lot of people, when the economy takes a nosedive, the downward slope drags their income along with it. Either way, who should you contact if life events come along and make it so that you have trouble making payments?
Here’s everything you need to know about where to start.
Why you don’t want to miss your payments
Missing payments – like utility bills, credit card bills, or rent – can have serious consequences. Depending on the payment you miss, you might incur late fees, see your utilities shut off, or even find a repossession or eviction notice on your door.
If the payments are reported to the national credit bureaus, your credit score could also take a hit. Long-term, that can make it harder to get new credit or even rent a new apartment when you need it.
What to do if you’ve lost your income
We’ll be blunt here: losing your income sucks. Fortunately, when the paychecks stop coming in, you can file for unemployment so you don’t find yourself struggling to pay bills.
In most places, unemployed individuals qualify for 26 weeks of unemployment benefits. How the application process itself works varies by state.
You can use this tool from the Department of Labor to contact your individual state’s unemployment insurance office and get started.
Contact lenders, loan servicers, and other creditors
Whether you’ve lost your income or just fallen behind, one of the worst things you can do is to stop paying your bills without notice. Instead, contact your lenders, loan servicer, bill collection agency, or other creditors.
They may be willing to offer deferment, forbearance, or a loan modification to help you through tough times. National credit counseling agencies also provide resources to help you take this step.
What to say when you contact a lender
The way you speak to lenders when you need help is important. Start by explaining your circumstances and let them know what you’re doing to fix your circumstances, such as looking for a new job, applying for unemployment or taking other proactive measures.
From there, ask if there’s anything they can do for you, such as offering forbearance, deferment or interest-only payments. The key to remember when having these conversations is to stay calm.
Yes, you’re in a stressful situation. However, more likely than not, the person on the other end of the conversation is just trying to help you, so make it a point to not take your stress or your emotions out on them.
Consider debt consolidation or credit counseling
Credit counseling organizations like the NFCC are non-profit firms that advise consumers about money, debt and budgeting. These trained professionals are often affordable, if not free, and they can help you evaluate your situation while you work on negotiating with lenders.
But talking alone won’t get you out of debt. You’ll still have to pay all your bills. So, debt consolidation is a strategy worth considering because it can combine your debt into one larger, potentially lower-interest debt.
Again, you’ll still have to repay your debt. However, a single monthly payment tends to be more manageable than trying to tackle many at once.
Prioritize your bills
Budgeting is always important, but this is especially true in trying times. If you’re worried about making payments, prioritize your bills and see if there’s any part of your budget you reduce.
Generally speaking, your priority list will start with the essentials, like food, housing and utilities. Closer to the bottom of your list, you will likely see activities you could realistically do without, like frequently eating out or subscribing to four different streaming services.
Helpful resources when you can’t pay all your bills
If you’re struggling to pay your bills, you can reach out to your community, state and national resources for help.
Help with buying food
Many local food banks and pantries can help families that are facing food insecurity. Let them assist you as you seek to find a way to keep food on the table. You might even be able to get food delivered to your door, which can save you time and gas money.
Help with paying rent or mortgages
If you can’t pay your rent, start by consulting the National Low Income Housing Coalition’s assistance database. The Department of Housing and Urban Development also offers helpful resources.
Another option is to reach out to the Homeowner Assistance Fund. You may also be able to refinance your home or even rent out a spare room.
Help with medical bills
If you don’t qualify for employer insurance, the government marketplace can help you find affordable health insurance. For instance, COBRA plans provide interim coverage for individuals who recently suffered divorce, job loss or other qualifying life events.
For existing medical bills, USA.gov offers resources that can help you find the assistance you need.
Help with childcare
If you need help paying for or accessing childcare, ChildCare.gov can help you find government assistance and head start programs, like the Child Care and Development Fund. Many individual states also offer childcare assistance.
Help with student loans
If you can’t pay your federal student loans, take comfort in knowing that many individuals currently qualify for anywhere from $10,000 to $20,000 in student debt forgiveness under President Biden’s new student loan forgiveness plan. His plan is also designed to lower monthly minimum payments and reduce interest rates for those who have student loan debt as well.
Public service workers can also submit a Public Service Loan Forgiveness application before October 31, 2022. Doing so can result in you receiving credit towards student loan forgiveness.
If you need additional help, you might be eligible for forbearance or deferments through your lender or loan provider as well. You can contact your loan servicer directly for both private and federal loans.
Short-term and emergency loans
Sometimes, you just need a short-term or emergency loan to weather a rough patch. Start by contacting your local credit union to see if they offer payday alternative loans (PALs). You can also look into pawn shop loans.
However, you’ll want to avoid title loans, cash advance loans and payday loans. All of these types of loans come with high-interest rates and incredibly short-term repayment periods.
Who should you contact if you have trouble making payments?
If you can’t pay all your bills, you can reach out to local, state and national programs for help. Charity organizations also have tools that can help you. And if you find yourself saying, “I don’t make enough money to pay my bills,” for more than a few months on end, it might be time for you to consider making a career change.
What happens if I don’t make payments on time?
The consequences of not paying your bills will vary based on the specific bill. Sometimes, you might incur a late fee or a drop in your credit score. Other times, your utilities could be shut off or the bill might be sent to collections.
What happens if you can’t pay your credit card for several months?
If you’re struggling to pay your credit card bill, your score will likely take a big hit. Additionally, the lender may sell your bill to collections as a way of enforcing payments.
What happens if you don’t pay your phone bill?
Your phone operator will likely disconnect your line as a result of a persistent lack of payments. If you’re still paying for your phone itself, you could also run the risk of your phone being repossessed as well.