How to Deal With Your Creditors When You Can't Pay the Bills

Financial problems
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If you have fallen behind on your bills or if you have lost your job you may be wondering what you can do in order to keep paying your bills. When you face a difficult situation where you cannot currently afford to make all of your payments, then you will need to begin working with your creditors. This can be difficult, and many may not be willing to work with you from the beginning, but being consistent can help you when you try settle the debt later.

Create a Budget and Prioritize Spending

You need to sit down and look at your budget. When you do this you need to prioritize the bills that you have and the order that you are going to pay them in. You need to meet your basic needs first: food, housing, utilities (this does not include cable) and possibly your car. Then you need to prioritize your spending. You should not be spending money on entertainment, eating out or vacations when you are in these situations. Additionally, you should try to keep your grocery bill low. It does not make sense to eat steak dinners when you cannot afford your payments.

You need to be on a bare bones budget and cut your spending back as much as you possibly can. 

Work to Catch Up on Necessities First

Look at the amount you have left over after you have paid for the necessities. Then look at the amount you must pay in payments each month. If they are equal to each other or if you have extra money after these bills are met, you are in better shape. You will need to apply the extra money until you have caught up all of your bills so that they are current. If you do not have enough each month to meet these obligations you will need to figure out which bills you are going to let slide and which ones you will continue to pay.

Try Setting Up a Payment Plan

If you cannot pay the full amount on certain bills you should contact your creditors and explain the situation. Ask them if they can temporarily lower or suspend the payment amount as you try to get caught up. You should also write a letter to your creditors and include a copy of your budget and explain how much you can pay them each month. You should also explain your current plan to remedy the situation. These steps will not stop you from destroying your credit, but they are good faith efforts, and may help you if you are taken to court for being behind on your payments.

You should document all calls and send the letters certified mail so that you can prove that you sent them. 

Find Extra Money

You need to get caught up as quickly as possible. This means taking a temporary job or a part time job to make the extra money you need to cover payments. If you do not make enough to cover your basic payments, then you need to remedy the situation as quickly as possible. Determine if you can't afford your car payment, and that is why you can't pay the rest of your bills. Selling your car may help you get caught up. You may also need to sell other items to help you get caught up on your payments.

Consider selling on eBay or Craigslist to see if you can raise money to help you cover your expenses.

Make Sure You Stay Current on Mortgage and Necessities

You should continue to pay full payments on your mortgage, even if it means not paying on credit cards, you do not want to lose your home. If you talk to your mortgage company they may be able to roll back payments into your loan, but only if you are behind. If you fall behind on your mortgage work to get it caught up before you worry about the rest of your bills.


  1. Most credit card companies and banks will not settle debts with you until you are several months behind. However, informing them of your current situation may help you because they can temporarily lower payments or reduce interest rates.
  2. When you contact the companies calmly explain the situation. Being polite and respectful on the phone will help you more than yelling and screaming. If you need to keep asking for a manger until you speak to someone that can help your situation. Be persistent.
  3. If you are receiving collection calls you can explain the situation and your plan. If your creditors harass you and yell at you simply hang up the phone. You do not have to take that kind of treatment, even if you are behind on your bills.
  1. Although, it is frustrating to have no extra money, it is important that you stick to the plan until you find a new job and you catch up on your payments. This will help the situation to improve more quickly, instead of becoming worse.
  2. Make your house payment a priority or you can risk losing your home. However, if your house payment is too much for you, then you should sell your home before you lose your home. This can relieve a lot of your financial pressure and stress.