Have you ever had to go through one of those events in life that you hoped you would never have to experience? If you have lived life at all your answer will more than like be yes. There are different ways financially you can go through one of those experiences. One of those experiences is not being able to pay your bills on time due to loss of income or lack of planning. What do you do when this unfortunate situation is now a part of your life?
Unfortunately, this is not as common as one would think. According to a recent survey done by Price Waterhouse Cooper, 39% of Americans have difficulty paying their minimum credit card payments on time (which does not factor in past due medical bills – the number one reason for filing bankruptcy).
If you are behind on your bills this can be a very scary time for you. Often the fear causes paralysis, which often leads to falling further behind (and the cycle continues to repeat itself). Here are five ways to tackle being behind on your bills and dealing with collectors.
- Budget – First things first, you need to have a plan. That is all a budget is. When you write down all of your income and expenses on paper, you will quickly be able to self assess exactly where you are. Many times, there is more money available than you realize. Be sure to always take care of the basics first (food, clothing, housing/utilities and transportation).
- Communicate – Contact your creditors and first find out exactly how much you owe and how far behind you are. Then ask what repayment plans are available. Usually, you can work out a payment arrangement that you can pay. By doing this you will be amazed how much that will reduce them calling your repeatedly. You will still get calls and letters, just not as frequent. If you cannot afford to pay them their minimum payment then consider using the pro-rata plan (details on how to utilize the pro-rata plan are here)
- Get More Money – This may seem overwhelmingly obvious, but if you do not have enough money to pay the bills, you need to get more money. You may have to swallow your pride and temporarily get a second job or some overtime. This may not be any fun, but there is no fun in being broke and having collectors ruining your life.
- Negotiate – If you are far enough behind and have some money you can scrape together, you might be able to call up and negotiate a settlement and pay a lower amount than what is owed. Sometimes even creditors will offer a settlement if you can come up with the money. This can be a great way to get creditors out of your hair. However you have to be very careful when you do this (click here to read how to properly handle negotiating with creditors – NOTE: I am not endorsing not paying a bill or deliberately paying less when you have the money to pay them).
- Cut ‘Em Up – That’s right. I am asking you to cut up and close your credit cards. Obviously they have not been a blessing for you and there is zero need for them. This is the best way to prevent future problems because you cannot fall behind on a credit card you do not have
Crippled by Fear
You still may be facing the fear of the unknown. Collectors are known for bulling people around and that can be a scary situation. If you are paralyzed by fear and do not know where to begin (because your situation seems too overwhelming) this is where having a financial coach can be of help. A financial coach can walk with you through your situation and can provide the help and hope you need to get beyond this hurdle. Here is what Curtis had to say about using a financial coach
“Not only was I able to get caught up on all of my bills, I was also able to pay off $7,000 in debt in 90 days!”
Following these steps will help you get control over your finances and get your life back. Life’s too short to be broke and scared. The time is now for you to have hope with a plan.
If you were behind on your bills, what would you do?