When I Can’t Pay My Bills – 9 Crucial Steps You Can Take

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Co-authored with personal finance expert Brian Loman of ElcLoans

Have you said to yourself I Can’t Pay My Bills? There’s nothing worse than having a pile of bills and notices from collection companies and just not having enough money to pay them.

Here’s what my family and I did when we couldn’t pay our bills:

If you can’t pay your bills, start by cutting all unnecessary expenses, prioritize bills from most to least important, delaying or reducing payments to the least important, negotiate with debt companies, add a side hustle to boost income, and do a monthly budget.

When we can’t pay our bills, we feel ashamed and feel like we are failing. If we have a spouse and/or kids we feel like a failure to them to.

However, I’m here to tell you that almost everyone considered “successful” today has, in fact, felt that way too at some point in their lives.

The #1 financial guru in the world is probably Dave Ramsey and guess what? At one time, before he was a household name, he filed for bankruptcy.

So today, we’re putting aside judgments and feeling sorry for ourselves and getting about the business of figuring out how to get our financial house in order and get our lives back on track.

Specifically, we’re looking at all the steps you need to take when you are saying “I can’t pay my bills!”

If you’re in the situation where a personal loan is the last resort, the folks over at Next Day Personal Loan (click to learn more on their site) make it easy to get the best offers in under 2 minutes, without affecting your credit score!

What happens if you never pay your bills?

Middle Class Dad can't pay my bills stressed money guy on phone

We’ve all struggled to get ahead.  Even the best of us have had points where we were behind on our bills and our bills exceeded our income.

Trust me.  I have had more than a few times when I said I can’t pay my bills!

When I can’t pay my bills I not only have the financial burden. I also have emotional turmoil.  It makes me feel like a failure.  I feel like I’m letting my family down. But I’m also stressed.  Bill collectors start calling.  Envelopes start showing up in the mail.  I start to panic.

Technically and legally though, when you’re at that place where you say I can’t pay my bills, a few things can happen.  Those include: 

  1. Damaging information can be put on your credit report – late payments and unpaid debt stay on your report for 7 years
  2. If you have a “secured” loan, that means you legally promised something as collateral against the debt.  The creditor can take possession of whatever that is (car, house, etc).
  3. If you got someone to co-sign a loan you are putting their credit report at risk too. So make sure to let them know

The key is to not procrastinate or hide your head in the sand.  You made this mess so it’s up to you to clean it up.  Get information, make a plan and take action.

I have a previous post about the best ways to stop Living Paycheck to Paycheck (click to read my article).  Take a moment and review those steps as they can make a big difference!

Can you go to jail for not paying your bills?

Middle Class Dad can't pay my bills drowning person hand in water with help written on it

In the 1800s the so-called “Debtor’s prisons” were commonplace.  If you said to yourself I can’t pay my bills, there was a very real chance of ending up in jail.

Fast forward to today and there are really only 2 kinds of debt that can land you in jail in the US.  Those are a failure to pay taxes and failure to pay child support.

That being said, if a creditor does take you to court for bad debt and a judge issues an order to appear, you could be jailed if you fail to show up or otherwise don’t follow the judge’s orders.

Nolo.com has an excellent article that goes into greater detail on the subject, so if you are concerned or are receiving threatening letters, check out their post about Bill Collectors and Jail Time.

How do I get out of debt with no money?

It’s like the chicken and the egg. Which came first.  How can you pay your bills and get out of debt when you don’t have much money to begin with?

That’s a question many of us who have said “I can’t pay my bills” have wrestled with.  The key is two things:

  1. You need to get on a written monthly budget 
  2. You need to examine both your income and your expenses

If your income is too low or your expenses too high, you’ll never succeed financially or otherwise.  For a detailed plan of what to do when you’re Budgeting on a Low Income (click to read my article), take a moment and review my post on that to help get you started.

Want more help on getting out of debt?

Check out my free Get Out of Debt Checklist which walks you through the journey step by step.

So what are the . . . 

9 Crucial Steps I Follow When I Can’t Pay My Bills?

1) Cover Basic Needs First

When you’re struggling to the point of not being able to pay the bills, the first thing you need to do is take care of you and your family, not the bills themselves. That doesn’t mean ignore your bills, but it does mean ensuring there is food and basic necessities before you begin to tackle the issue.

Necessities obviously include rent, power, and water, but putting food on the table is more important than paying the cable bill.

This all comes down to prioritizing and realizing which stage you are it with each outstanding bill.

2) Prioritize Bills and Debts

If you simply do not have enough money to cover everything then you’re stuck with the difficult task of prioritizing bills and debts until you are back on your feet again.

You should take in to account how necessary each bill is for survival (as previously mentioned the cable bill can go somewhere near the bottom), but also what the repercussions are for failing to pay. This might depend on whether you have already missed payments.

For example, not paying the electricity bill may eventually lead to it being cut off. However, this is unlikely if it’s the first time you missed a payment.

You might also be in the realm of vehicle repossession (failing to pay car loan) or home repossession (failing to pay a mortgage).

List everything and determine what is absolutely necessary to pay this month.

Want an easy and cheap way to cut your bills?

I just signed up with BillXpertz. They negotiate with the bill companies of your choice. If they can lower your payments, they take a small percentage of the savings. If they can’t reduce your bills, it costs you nothing.

In my case, they cut my monthly phone bill by $30 bucks a month and all that cost me was a one-time payment of $13 bucks!’

Talk about easy money! Check out BillXperts (click to go to their site to see how much you can save) and see if they can’t save you money too. Some folks have saved thousands!

3) Re-budget 

As well as prioritizing your bills it’s also important to reassess your income and budget accordingly, so you can begin to reduce the cash-flow problems that got you here in the first place.

There are a lot of ways you can cut expenses and divert money towards your outstanding bills; from downgrading or cutting your cable or cell phone plans, to buying generic and unbranded groceries and day-to-day items, to limiting your leisure activities that cost money, or walking and cycling to work.

A budget does not have to be complex. You just need a complete list of income and expenses, allowing you can calculate the difference and see where you can tighten your belt.

4) Negotiate 

Creditors can be surprisingly sympathetic if you start a dialogue and honestly explain the situation (though it’s best to do this before going into the red).

Many companies will have policies about extensions, repayment plans, lowering bills. Or they may be open to moving you on to different plans and fees (depending on the bill). So don’t be afraid to negotiate.

Ultimately they want to get paid and this is more likely to happen if they work with you instead of demanding the full amount right away with no wiggle-room.

The worst thing you can do if you can’t pay your bills is to ignore them indefinitely. This will almost always result in the service being cut and collection proceedings to recover what is owed.

If your credit ends up in bad shape, I highly recommend checking out my Credit Report Repair Steps (click to read my article on all the steps).  No need to pay anyone when you can do the same thing at no cost.

5) Use a Loan or Credit Card, but Wisely 

Using debt to cover debt is only an option for those who are disciplined and have already assessed their finances.  And it should be a last resort to ward off bankruptcy or foreclosure.

But if you have done the calculations and determined you’ll be able to repay a loan or credit card debt to cover your bills, then it could give you some much-needed breathing room.

If you can’t afford it, however, you might just make your long-term situation worse. 

6) Work Overtime or Get a Side Job

Although you’re not going to see the money instantly, one way to help get yourself back on your feet is to work overtime (if possible) or get a second job, do some online freelancing, or sell unwanted belongings.

This extra effort does not necessarily have to be permanent, but it’s always a good idea to get bills and debts paid as soon as possible, so if the option for added income is available you should certainly take it. 

If you don’t have time for a traditional side job, check out my Earn Extra Cash.  Many of these can be done from home!

7) Conserve Energy

One simple money saver that many people overlook is reducing their energy.

Do you turn off all the lights when you leave the room? Do you leave your computer on overnight or leave other electronics and appliances plugged in? Are you using energy efficient bulbs and less intensive settings on the washing machine and dishwasher?

All of these can help you save on your energy bill in the subsequent months, to help you get back in control of your finances.

8) Don’t Go It Alone

If you are married or in a serious relationship it’s vital to make sure they are on the same page.  Money fights and money problems are often the top Reasons for Divorce.  So make sure you are totally open and honest with them.

If the 2 of you are united you’ll be that much stronger.  You are a team now instead of wasting time and energy fighting each other or hiding the mess from each other.

9) Don’t Get Too Stressed 

Finally, remember that as stressful and demoralizing as it can be to unable to struggle to pay the bills, it’s not the end of the world.

There are usually several steps that take several months before you start getting the power cut off, property repossessed, eviction notices, and other dire situations. Stress has a way of slowing our progress. It will slow you down in your journey out of this mess.

If this is the first time you’re late with bills, take a deep breath, follow some of the above tips, and take back control!

Did I cover what to do when you’re saying “I can’t pay my bills”?

In this post, we looked at the situation we’ve all found ourselves in at one time or another. When the bills outnumber the cash and we aren’t sure how to dig our way out!

We looked at how we got there, key places to cut back and talked about budgeting.

Most importantly, though, we talked about the crucial steps to fix things when you’re at the place where you’re saying “I can’t pay my bills”!

The app Trim (click to learn more on their site) automatically looks at your monthly bills & spending and then cross-checks that with savings programs almost all vendors have. It’s a great way to save a few extra bucks when you’re trying to get ahead!

When they match up, you save. They’ll even handle the hassle of canceling memberships you no longer want or renegotiate bills for you like insurance and cable bills.

Just sign up and spend on your Visa card and earn automatic savings back on your statement!

What is your biggest financial challenge right now?

If you like this post, please follow my Budgeting board on Pinterest for more great tips from myself and top financial experts!

About the co-author of this post:

Brian Loman is a longtime blogger, with a particular passion for personal finance and insurance. He also blogs about lifestyle and a range of other topics for a number of websites. He currently writes for ElcLoans, where he shares his knowledge on short-term loans.

Want to write for Middle Class Dad? Get all the info you need here: Guest Blog for Middle Class Dad!

Middle Class Dad can't pay my bills bio

Photo credits (that aren’t mine or which require attribution):
Heartbreak Hotel (Monopoly jail) by Andrew Gustar is licensed by Creative Commons
While I have years of successful financial & budgeting experience and run several million dollar businesses and handled the accounting, P&L and been responsible for the financial assets of them, I am not an accountant or CPA. Like all my posts, my posts are my opinons based on my own experience, observations, research and mistakes. While I believe all my personal finance posts to be thorough, accurate and well-researched, if you need financial advice, you should seek out a qualified professional in your area.

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Jeff Campbell

Jeff Campbell is a husband, father, martial artist, budget-master, Disney-addict, musician, and recovering foodie having spent over 2 decades as a leader for Whole Foods Market.

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