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What do you do when you can’t pay your bills?
While this may not pertain to you currently, it is always good to be prepared.
Millions of individuals are currently facing a situation that they absolutely never anticipated. Without any notice, they are unemployed. Worse, because of the situation that we are currently experiencing, job searching is almost an impossibility. Even though many of these people are eligible for unemployment, for many, the process has proved long and harrowing.
The reality is that there are many people who are not going to be able to pay their bills on time or even anytime in the foreseeable future.
So, what do you do when you can’t pay your bills?
Don’t ignore the situation
The worst thing you can do when you can’t pay your bills is to ignore the situation and assume that the company knows that you have personally been affected by the pandemic.
Just recently, there was a big uproar because of two hospitals freezing people’s bank accounts. The general consensus was that the hospitals were horrible for taking action during a time when so many people were jobless.
News flash: It is generally a very long process, usually involving going to court, prior to having wages garnished and bank accounts seized. It was pure coincidence that the action of the collectors culminated during the pandemic.
Most likely, every attempt to collect the debt had been ignored.
(Obviously I do not have insider details of the situation and every situation is unique. I am speaking in generalities.)
Make contact with the creditor
Especially now, most companies have a plan in place to address the situation. Even when we are not in a pandemic situation, most creditors will be willing to work with you. (I know absolutely that this is not going to be the case 100% of the time. But it is where you start.)
I reached out to Jennifer who works at State Farm. I asked, “What is going to happen if someone can’t pay their insurance bill?” State Farm has a very reasonable plan in place to take care of those affected by this pandemic. To know your options, you must first contact the creditor.
Document, Document, Document
I can not stress this enough. If, down the road, you can not verify to whom you spoke, the date on which you spoke to them and what the outcome was, it didn’t happen.
If the original contact is by telephone, ask if you can send out an e-mail, verifying the information that you received. Explain that you would like to make sure that you do not misunderstand the information that you received. This serves as both a reminder to you as well as clarifying anything that could have been misunderstood.
Follow through on your agreement
If you make payment arrangements with a creditor, hold up the agreement by paying the bill by the date agreed upon and in the amount discussed. If you are unable to pay as agreed, start the process over. Be honest.
Communication is the key
Maintain contact both initially and ongoing as needed
After working in post-secondary education for many years, I realized that many student loans could be kept out of default simply by picking up the phone and communicating.
Don’t wait
Acting quickly when you are unable to pay a bill is in your best interest. The longer you wait, the smaller the window of opportunity to fix the problem becomes. Waiting until your bank account has been frozen is definitely an example of waiting too long.
It is far better to make contact early than it is to wait to see if you can magically pay a bill and make contact later.
If you can’t get back on track
Despite out best intentions, there may come a time that you just can not recover financially. Please contact a professional for help.
I reached out to our local Connecting Link. She provided me with this information: “Anyone in the country can dial 2-1-1 from their phone and will be connected to a 211 Representative in their area. They are able to connect them with just about any resource in their area”.
Also, it is possible that you may need a certified credit counselor. While I can not personally recommend any agency, with a little research I came up with a nonprofit (very important to me) company called American Consumer Credit Counseling, Inc. They are licensed to do business in all fifty states. Their counseling session and budget consultation is free.
Here is their link: American Consumer Credit Counseling, Inc.
It is your responsibility to perform due diligence in obtaining the help that you need. My point is simply to get help sooner rather than later.
This is a seriously stressful time. My hope is that everyone is able to pay their bills. But if you can’t, now or in the future, take the steps that you need to take, sooner rather than later.
Remember, if you take care of the little things, the big things have a tendency to take care of themselves.
(Disclaimer: I am not a financial professional of any kind. This is written to be a starting point, assuming that with time, the situation can be corrected. If you are in a severe financial situation, I would urge you to seek out a qualified professional to assist you in making decisions)
Related reading: Building a Zero-Based Budget
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(It’s a little thing that would mean a lot to me!)
Very good and helpful information Mick. Thanks for sharing .