Highlights:
- If you're facing multiple overdue bills, prioritize paying your necessary expenses first. These are the things that keep your household running such as mortgage or rent, car payments, groceries and utilities.
- When you've met your day-to-day expenses, focus next on bills that have the highest interest rates, fees and penalties.
- If you're struggling to pay what you owe, contact your creditors directly. Some may be willing to work with you to help you catch up on what you owe.
Falling behind on your bills can be extremely stressful, but it's important to face missed payments head-on. If you're feeling overwhelmed by unpaid bills, interest, late fees and more, these six steps can help you get back on track.
1. Create a list of your bills
Make a master list of all your bills, including their due dates and the amounts you owe along with any interest rates and penalties. When do you have to pay your utility bill? Which missed payments will result in a late fee? Which overdue balances are accruing interest and causing more debt? This list can answer all of your questions at a single glance and help you organize your repayment efforts.
2. Prioritize missed payments
If you're facing multiple overdue bills, you may be unable to tackle them all at once. So, you'll need to choose which bills must be paid immediately and which can wait a little longer.
Consult your list of bills and order each payment according to its importance. Begin with your necessary expenses, which are the bills you must pay in order to keep your household running. These generally include your rent or mortgage, car payments, groceries and utilities. Plan to allocate your income to these expenses first before you move on to your loans, credit cards and other debts.
3. Pay bills with the highest interest rates
Next, focus on repaying the bills with the highest interest rates, fees and penalties. With this debt repayment strategy — also known as the avalanche method — you'll pay your debts in order from the highest to the lowest interest rate. Since interest continues to accrue over time, targeting high-interest debt first may help you save money in the long run. Even a small percentage difference can impact the amount of interest you pay on a loan.
Expect your credit cards, which typically feature double-digit interest rates, to be among your priciest debts. Federal student loans and secured loans, including mortgages and auto loans, usually have the lowest interest rates.
If you're struggling to pay what you owe, contact your creditors immediately. Some may offer customized repayment plans that can reduce your monthly bills, lower your interest rates or waive fees and penalties.
4. Create a budget and track your spending
As you work to catch up on bill payments, it's important to look at your monthly budget. How much cash comes into your household each month and how much goes out?
If you don't already have a budget, begin by listing both your income and your expenses. Sort your expenses into necessary costs (such as rent, groceries and debt payments) and discretionary ones (non-essential spending, such as entertainment and travel). While you're catching up on your unpaid bills, reduce or eliminate your discretionary expenses. When possible, put leftover money directly toward your past-due bills.
Even when you're completely debt-free, you can continue to use your budget to track your spending. Regularly review your expenses to identify potentially harmful spending patterns. Look to cut down on frivolous purchases and ensure that your money goes where it's needed most.
5. Watch out for debt relief scams
Agencies such as debt settlement companies sometimes offer help managing unruly debt. They may promise to renegotiate or change the terms of your debt for a substantial fee, but their claims can be misleading. Before you agree to a settlement, read the terms carefully and consider less expensive alternatives such as nonprofit credit counseling agencies. These organizations often provide the same or similar services for little to no cost.
6. Consider financial assistance programs
If you find you often need help paying your bills, consider these special aid options:
- Repayment plans. Need help paying your cell phone bills? Can't make your credit card's minimum payment? Speak directly with your creditors. Some may be willing to work with you to ensure they receive partial payments. Start by explaining your financial situation and then ask for information about repayment plans or hardship programs.
- SNAP and WIC. If you're struggling to afford groceries, you may be able to qualify for food assistance. Programs such as SNAP (for low-income adults and families) and WIC (for low-income pregnant women and children) provide access to helpful food benefits. Qualifications for these programs vary by state, so refer to usa.gov/food-help for more information.
- Medicaid. If you have limited income, need help paying healthcare expenses and qualify, Medicaid may cover some of your costs. Medicaid is a publicly funded program that helps pay for many common healthcare services.
- Mortgage and rental assistance. If you can't make your mortgage or rent payments, seek out a HUD-approved counselor for free or low-cost guidance. You may be eligible for public housing, mortgage forbearance or other forms of aid.
No one wants to fall behind on their bills. However, if you do get off track, don't panic. Reviewing your situation — with the goal of balancing your income and expenses and better managing your debts — can help you catch up and pave the way for a brighter financial future.
FAQs
Call your creditors
Depending on your situation, ignoring your bills could lead to higher interest rates, damage to your credit score, repossession of your car, or foreclosure. Instead, talk to your creditors and explain your situation. They may be willing to forgive a late fee and to make short-term arrangements.
How to get caught up on bills when you're behind? ›
How to Catch Up on Bills When You Fall Behind
- Create a monthly budget. Setting a monthly budget and then sticking to it is one of the best ways to stay ahead on bills. ...
- Start paying small bills first. ...
- Work out a payment plan with your creditors. ...
- Get rid of unnecessary expenses. ...
- Pick up a second job.
What to do if you fall behind on bills? ›
Call your creditors
Depending on your situation, ignoring your bills could lead to higher interest rates, damage to your credit score, repossession of your car, or foreclosure. Instead, talk to your creditors and explain your situation. They may be willing to forgive a late fee and to make short-term arrangements.
How to pay bills when you're broke? ›
If you're low on cash, a credit card or checking account line of credit can help in the short term. The government has programs that can offer additional financial assistance. Check if any of your creditors might be willing to delay or lower payments for expenses like rent, mortgage payments, and insurance premiums.
How to get out of debt when you are behind? ›
6 ways to get out of debt
- Pay more than the minimum payment. Go through your budget and decide how much extra you can put toward your debt. ...
- Try the debt snowball. ...
- Refinance debt. ...
- Commit windfalls to debt. ...
- Settle for less than you owe. ...
- Re-examine your budget.
Why is it so hard to catch up on bills? ›
Once you get behind on your bills, it can be difficult to catch up – especially if you're only bringing in enough to cover your monthly expenses. Add in late fees, interest, and insufficient fund fees and it can feel impossible to catch up. If you're in that position, take a deep breath and check out our suggestions.
How to get money fast? ›
How to make money fast
- Test user experiences. ...
- Take surveys online. ...
- Sell stock photos. ...
- Sell other stuff you already own. ...
- Become a dog walker. ...
- Try pet sitting or animal care. ...
- Consider house sitting. ...
- Drive for a rideshare company.
Is debt settlement a good idea? ›
Using debt settlement options to reduce debt comes with several risks, including late payments on your credit report, potential charge-offs, settlement company fees, tax implications on forgiven balances, possible scams and the overall risk of settlement offers not working.
Will credit card companies forgive debt? ›
The only way credit card companies are likely to forgive the full amount of your balances is if you file bankruptcy. However, there are other ways to get out of debt in a reasonable amount of time. For example, you may be able to have a portion of your credit card balances forgiven with a debt settlement program.
Is national debt relief legit? ›
Is National Debt Relief legit? National Debt Relief is an accredited member of the American Association for Debt Resolution (AADR). It has been around since 2009 and has helped over 600,000 individuals reduce their debt. It also has an A+ rating from the BBB (Better Business Bureau).
In summary, if you've lost your job and can't make your bills, it's important to take action quickly, create a plan, and explore options like unemployment benefits, government assistance, and debt relief programs. Remember that you're not alone, and there are resources available to help you through this difficult time.
What to do when you're broke and unemployed? ›
What to do when unemployed
- Pick up a hobby. When you're unemployed, you have a lot of free time you can use to explore new hobbies. ...
- Exercise. ...
- Keep a schedule. ...
- Network. ...
- Learn a new skill. ...
- Travel. ...
- Spend more time with family and friends. ...
- Cut out bad habits.
Can I get money if I don't work? ›
Unemployment insurance pays you money if you lose your job through no fault of your own. Learn how to apply and where to find eligibility rules.
Can you get your debt forgiven? ›
Debt forgiveness is a process where a creditor pardons a debtor from part or all of their outstanding debt. Various types of debt may qualify for forgiveness. Debt forgiveness can offer relief from overwhelming financial burdens, but it does have downsides. There are alternative options for managing debt.
How to pay off $20k in debt fast? ›
Use a payment strategy
After the debt with the highest rate is paid off, you focus on paying off the one with the next highest interest rate, and continue until all your debts have been paid off. Another method is called the debt snowball, which focuses on paying off your smallest debt first.
What is the best debt relief company? ›
National Debt Relief is the best overall debt settlement company, according to our research. National Debt Relief's low-cost fee structure and referral service make it a top option for people struggling with debts. Our highest-rated debt settlement companies all charge similar fees, ranging from 15% to 25% of the debt.
Is it normal to be behind on bills? ›
While not ideal, being unable to pay bills is a situation that many Americans find themselves in. Approximately 78% of Americans live paycheck to paycheck, according to a September 2023 report. 1 A higher-than-expected utility bill or a reduction in work hours could trigger late or missed bill payments.
Do unpaid bills go away? ›
Unpaid debt is a type of derogatory remark that can appear on your credit report. A derogatory item means that you have not paid the debt as agreed and may represent credit risk to lenders. Derogatory remarks may last up to 7 years (or possibly more, depending on the remark) on your credit report.
How to get one month ahead of bills? ›
How Do I Get a Month Ahead?
- Create a budget (it needs to be a zero-based one to give you an accurate picture).
- Fund your expenses for this month.
- Once you can fund expenses for this month, start funding expenses for next month.
- Rinse and repeat. ...
- Experience the blissful peace of getting a month ahead with your budget.
Are people behind on their bills? ›
More Americans are falling behind on their credit card bills. About 8.9% of credit card balances fell into delinquency over the last year, according to the Federal Reserve Bank of New York — a sign that a growing number of borrowers are feeling the strain of rising prices and high interest rates.