What To Do When You Can’t Pay Your Bills?

If you are finding it difficult to pay your essential bills, please do note that you are not alone. As per a report published by the Federal Reserve, around 1/4th of adults in the United States are facing issues with clearing their bills. Either some bills are left unpaid or only partial payment is made. Not paying bills can further complicate the situation due to interest charges, late fee, bad credit rating, etc.

Of course, you have the option to borrow or tap into your savings or emergency fund. However, such options should be considered only as a last resort. Given below are some tips and suggestions, in terms of what to do when you cannot pay your bills.

Prioritize important bills – Seeing a heap of unpaid bills can be emotionally overwhelming. However, instead of losing your calm and composure, just try to prioritize the most important bills. You have to focus on the basics such as home, food, utilities, insurance, etc. Such bills can never be avoided. You will probably need to borrow from your bank or someone else to pay your important bills.

Get professional financial counselling – It may seem to be a simple matter of shortage of funds. However, your inability to pay bills can be linked to the way you manage your funds. You can probably try to get some sound financial advice from organizations like the National Foundation for Credit Counseling and the Financial Counseling Association of America.

You can also choose from the approved credit counselors list maintained by the Department of Justice. Through professional financial counselling, you can develop a detailed plan on how to reduce your debt and pay your bills.

Get started with a monthly budget – To improve your finances in the future, you need to start preparing monthly budgets. This can be easily done in a notepad or excel sheet. Make sure to list all income sources and all the expenses of the month. This will give you a better idea about which expenses are giving you a tough time. Accordingly, you can try to reduce those expenses.

Do people owe you money? – It is not uncommon for people to lend money to their friends and relatives. If some people owe you money and you are unable to pay your bills, it is the right time to contact them. You may or may not get the repayment immediately, but a phone call will be a step in the right direction.

Be in touch with your creditors – Communicating with your creditors can give you additional time to pay your bills. It is often just a matter of speaking to the right person. Everyone understands the financial difficulties people face in life. The problem arises when you completely stop communicating with your creditors. If you communicate regularly, you can get a good deal on paying your unpaid or partially paid bills.

Declaring bankruptcy is a last resort – It may seem like that, but declaring bankruptcy does not eliminate your bill payments. There is a penalty involved and your credit record stores bankruptcy for ten years. This is why declaring bankruptcy should only be used as a last resort.