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Ten Steps...What To Do When You Can't Pay Your Bills
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...or simply lived a bit above your means. Your financial crunch may be temporary, but your credit record is enduring...and overdue bills can haunt you for years to come.
What can you do if you're having difficulty paying your bills? Here are a few suggestions:
|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.
|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.
|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
|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.
|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.
| 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.
|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.
|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
|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.
|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.