Updated Oct. 2023
What to do when the bills pile up.
When financial hardship strikes, many people adopt a common coping strategy - ignoring their bills.
Financial distress can stem from various sources: illness, job loss, divorce, bereavement, or even a history of overspending. Regardless of the cause, mistakes happen, and nobody sets out to ruin themselves financially.
Don’t let the due dates keep passing by. It will only make things worse. Open those envelopes, get a good look at where you stand financially, and then start putting together a plan to tackle those bills.
The STCU loss mitigation team, which supports members who are having trouble with their loan payments, shared insight on how you can get back on track.
Customizing a solution for your circumstances becomes essential. That could be getting on a modified payment plan for your bills, cutting unnecessary expenses, and budgeting.
These pointers can help navigate through your challenging time:
Call your creditors:
No matter why you're in a financial bind, it's important to contact your creditors before things get too out of hand. Be honest, explain your situation and let them guide you on how they can help.
Most creditors offer hardship programs and can work out modified payment plans.
Create a budget and prioritize the essentials:
Identify your necessary expenses. That includes housing payments, basic utilities like electricity and water, food, transportation, and childcare.
Reach out to providers for assistance. Most of them offer programs to help you.
This is also a time to cut out nonessential expenses. Those are things like subscriptions, streaming services, excessive data plans, and club memberships.
Once you have a budget in place, you can start your debt payoff plan. We have a breakdown of the steps to take when you're ready.
View bankruptcy as a last resort:
Bankruptcy should be considered a last-ditch option.
It doesn't wipe away all forms of debt, and its repercussions linger for years. The filing can impact your credit report for seven to ten years, making it challenging to secure a home, car, or insurance.
You also risk losing personal assets through bankruptcy.
Be sure to talk to your financial institution to understand the impact on your accounts before filing bankruptcy.
Know your rights with debt collectors:
The Fair Debt Collection Practices Act is a legal protection designed to shield individuals from unfair and abusive practices by debt collectors. This federal law establishes specific guidelines and regulations that debt collection agencies must follow when trying to recover debts from consumers.
Financial hardship can happen to anyone, and the important thing is to address it right away. Ignoring the issue won't make it disappear, but reaching out, seeking help, and developing a well-considered plan can pave the way to financial recovery.
