What to do if you can’t pay your bills right now

Right now, we’re all facing financial uncertainty that we’ve likely never navigated before. If your family is rethinking your strategy for spending and saving money, or if you’re suddenly facing debt or financial hardship you didn’t anticipate, you’re not alone.

We do know people are looking for a plan forward for their finances. And as bills begin to pile up and as people begin to dip into their savings, families are looking for ways to avoid financial distress.

Here are some steps you can take to get yourself back on track if you find yourself unable to pay your bills.

1. Audit yourself to see where you stand

As a first step, and in order to get the full picture of your finances, take an inventory of all your expenses, like groceries or utilities, and any money you currently owe, like credit card bills.

Identify any unnecessary expenses that you can cut back on for the time being, such as any subscriptions being paid automatically.

Knowing everything you owe, plus your projected expenses for the coming months will help you see where you stand, and will allow you to make a realistic plan for yourself.

2. Make a budget and prioritize only what is necessary

Now more than ever, Americans need to be extremely diligent with their money, prioritizing what matters most, like rent and other necessities. Every family’s financial situation is different so it’s important to make a realistic plan for your money.

To help you get back on track, create a budget for your family that you’re willing to stick to. This should only include necessary expenses at this point, like rent and groceries. In order to help stabilize your finances over the long term, map out your projected expenses over the next three, six and nine months, since there’s uncertainty around how long the effects of the global pandemic will be felt.

Planning for the worst is the way to stay ahead of financial problems.

3. Know every relief option available to you

Be proactive about understanding your options and take action when possible. Depending on your family’s situation and expenses, there may be forms of relief available to you, so it’s worth doing a bit of research to understand how you can get your debts under control. Here are some debt and financial hardship relief options to know about:

• Your bank or credit union may be offering consumer protections and relief, including fee waivers, deferred payments for credit cards, auto loans and mortgages, loan modifications, low-rate and zero-rate loans and other accommodations. See what your bank is offering by checking this list or your bank’s website, or consult this list of credit unions offering consumer financial support.
• Call your credit card issuer. Numerous credit card companies are offering some kind of debt relief, such as waived fees or deferred payments.
• If you’re a homeowner and you’re worried about making a payment, reach out to your mortgage lender. Many offer programs like mortgage forbearances that allow you to either temporarily stop making payments or temporarily lower your payments. (Again, always be sure to read the fine print so you know what you’re getting yourself into, as there may be penalties to some options down the line.) Under the CARES Act, your family may be eligible for mortgage forbearance options for coronavirus related financial hardship. And because mortgage rates are low right now, refinancing might free up some financial flexibility, although the process takes time.
• If you’re a renter, speak to your landlord about your options. If your landlord’s mortgage is from a federal lender, you cannot be evicted for nonpayment due to coronavirus-related hardship. This eviction forbearance, part of the CARES Act, is currently in effect through July.
• Under the CARES Act, all federal student loans are in a state of administrative forbearance, which means you can temporarily stop making payments through the end of September, with no accrued interest. Sallie Mae, Navient and Wells Fargo are also offering temporary loan forbearance for student loans—contact your lender.
• A number of internet companies have “pledged” not to terminate service for customers due to nonpayment caused by coronavirus-related financial hardship. Check to see if your utility companies are on this list, which includes AT&T, Comcast, Sprint, T-Mobile, US Cellular and Verizon.
• Utility companies in some areas have also announced that they will temporarily suspend service terminations for nonpayment—check your utility providers’ websites or call them.
• Unemployment insurance is available at higher rates for a longer period, and more people qualify under the CARES act, including part-time workers, freelancers, people on furlough and people who were recently laid off. If you are unable to work because your child’s daycare or school was closed, for example, you are eligible for unemployment under the new provisions. And if you have been forced to accept reduced hours, you’re eligible, too.

4. Keep your credit accounts current, if possible

On-time payments are one of the key pieces factored into a credit score so I’d encourage you to avoid letting bills go unpaid entirely, if you can. Instead, do some research and find out what the minimum payment is for each of your bills, and pay that, if possible. If you’re unable to pay at all, call to see if there’s a way to defer payments temporarily.Paying the minimum payments on your monthly bills will help you keep your credit accounts current.

5. Avoid payday loans or maxing out credit cards

Payday lenders tend to prey on those in desperate circumstances, and these loans can be the beginning of a long cycle of debt with high fees and interest rates.

Likewise, you can quickly rack up interest and fees with credit cards if you’re putting more money on them that you can pay back.

Instead, if necessary, look into other options available to you such as an emergency or personal loan, which often have lower interest rates. Always read the fine print before signing anything so you understand the terms and implications.

Overall, navigating your finances during this time of uncertainty can seem daunting and overwhelming. But it isn’t impossible. The key is to take the first step. Now is the time to advocate for yourself and finances.

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