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Envelopes with past due bills
Envelopes with past due bills
Envelopes with past due bills

Published January 26, 2017.
Updated October 28, 2019.

What to do when you can't pay your bills.

It's not unusual for people who can't pay their bills to just stop opening them. As their debts pile up, so do their piles of tossed-aside mail.

But ignoring the problem only makes it worse, says Debra Jackson, who oversees STCU's Financial Relief Solutions program.

Can't pay your bills? Open them anyway, she says. Get on the phone, and start sending letters. Seek out resources, ask questions, and ask for help. Prioritize your expenses, and make a plan.

Financial hardship happens.

The causes of financial hardship vary: illness, job loss (or wage reduction), divorce, a family member's death. Maybe a pattern of overspending has come to a head.

Even if you made mistakes that contributed to your situation, they were just that: mistakes.

"Nobody sets out to ruin themselves financially," Jackson says.

Regardless of the causes of the problem, contact everyone to whom you owe money — ideally, before your accounts get into past-due mode. Many creditors offer hardship programs or will work out new payment plans. Be honest, Jackson advises. Explain your situation. Let them tell you how they can help. 

After that, you'll need to customize a solution. It might involve an immediate fundraising push before your plan starts to take effect: Sell unused furniture, find side jobs, get a roommate.

And while financial counseling can be helpful, beware of scams. Educate yourself about the risks and benefits of "credit repair clinics" and "debt management plans."

"Nobody sets out to ruin themselves financially," Jackson says.

Here are a few more suggestions:

Protect your essentials

Decide what you require to live and work. Housing payments, basic utilities (like electricity and water), food, transportation, and child care would fall under this category. Contact the providers to ask for help: Your energy company might run an assistance program, or your mortgage lender might have programs to help avoid foreclosures.

Then cancel the nonessentials: subscriptions, streaming services, giant data plans you don't need, club memberships.

View bankruptcy as a last resort.

Bankruptcy doesn't eliminate all types of debt, and the consequences last for years. A Chapter 7 filing will stick to your credit report for a decade, making it difficult to get a home, a car, or insurance.

You also risk losing your personal property through bankruptcy.

"These should be the worst situations," Jackson says, such as when a two-adult family has irrevocably lost both sources of income.

Know your rights with collectors.

The Fair Debt Collection Practices Act protects you from predatory practices, such as harassment, from debt collectors.

It's illegal for them to call you at work if you ask them not to. In fact, they need to stop contacting you altogether if you ask them to — but do it in writing. The Consumer Financial Protection Bureau offers sample letters to send to collectors, plus more information about your rights.

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