If you think you may not be able to pay all of your bills this month, you’re certainly not alone. At the same time, late payments do not need to be a problem that grow into an ongoing, recurring issue for you, rolling over month-to-month.
The important thing is you take corrective action, come up with a plan, and establish a financial safety net right now. This way, you may be able to avoid late payments rather than scrambling on the internet searching for things like “how long do late payments stay on your credit report,” or “how to get rid of late payments on credit report.”
When you find yourself in a financial bind that has you shouting, “I can’t pay my bills!” or “I need financial help immediately!”, here are some steps you can follow that may help you get out of it and prevent a similar situation from happening again.
1. Determine the Specific Consequences of Missing Each Bill
We’re sure you’ve already done some version of this in your head, but it helps to put it down on paper. So, how do you figure out the consequences of late payments and what do you do with this information?
Start by Reviewing Your Bills
Start with the services that are essential to living your life and take note of how much you owe for each bill. This could include the basics such as heat, electricity or gas. It may also include things such as your childcare expenses or your transit pass to get to work.
Review the Repercussions of a Late Payment
Begin to do some research and ask yourself, what happens if you miss a bill payment on the particular bills you regularly have to pay off? Some late payments may result in significant consequences aside from late fees, and it’s important to understand what these consequences are before you learn about them firsthand during a financial emergency. Some bills that may have significant repercussions for missed payments that extend beyond late fees include:
- Child or spousal support payment
- Mortgage payment
- Car payment or car insurance payment
- Secured loan payment
For example, a series of late child support payments may result in = difficulty for you to renew your driver’s license or your passport, or potentially having your wages garnished[1]. If you’re late on car insurance payments, you could be dropped by your provider, forcing you to find another provider at a potentially higher rate[2]. Also, late mortgage payments may put your home in jeopardy.
Any secured loan payments may have significant consequences for missing payments. You may have put a piece of property or an asset up to secure this type of loan, which obviously places a high priority on keeping it in good standing.
2. Keep in Contact with Your Creditors
As cumbersome as it may feel, you need to keep an open line of communication with your creditors. Respond to their emails and start taking their calls instead of hitting ignore and letting it send it to voicemail. In fact, you will actually want to reach out to them before they even start calling you. As soon as you know you’re going to be late on a payment, call or email the company to set up a payment arrangement.
Some people may dread making these calls because they feel shy or are embarrassed given the circumstances, but there’s no need to fright. These things happen and many companies have entire divisions of staff dedicated to working with you and these types of situations. Whatever the case, your call concerning your potential late payment or missed bill isn’t the first and won’t be the last one that the company will have to deal with.
It’s important that you never “ghost” or ignore your creditors[3]. It may be the easy thing to do in the moment, but it will be harder on you in the long run. You can’t outrun, outwait or ignore debt. There is no statute of limitations and a debt won’t just expire if the creditor doesn’t get a hold of you. So, answer the phone and make some quick calls if you’re going to be late on your payments to ensure that you don’t put yourself into further financial hardship. Afterall, if you continue to avoid the inevitable, you may soon have to face the difficult question of “how long do late payments stay on your credit report?” and find out the tough way – a situation that we really do not want our readers to experience.
While it’s important to be a responsible borrower, at the same time it’s essential to understand what a responsible online lending company looks like before you even apply for a loan with them.
3. Ask Yourself Why It Happened and Be Honest
You need to take an honest and thorough look at your finances to determine why you’re short this month.
If you’re short because an unexpected expense popped up, know that it happens to the best of us. Nobody is immune to their car suddenly needing a repair, or suddenly needing a dentist for a cracked tooth. In fact, about 40% of Americans have less than $300 in savings, according to a GOBankingRates survey[4]. So, there is no shame in realizing, admitting and saying to yourself “I can’t pay my bills this month.” The important thing is realizing this quickly and dealing with it before it leaves lasting effects.
If an emergency expense is the reason you’re in this situation this month, you might want to consider a financial safety net to act as your emergency financial assistance in the future. But, more on that later.
If you’re experiencing a cash shortfall because you’re living outside your means, you may need to re-evaluate how you spend your money month after month. If you take a look at why you are in a difficult financial situation and think, “I spent too much money this month,” ask yourself if you’re spending too much money every month.
It could be time to take an honest and detailed look at your spending habits and create a realistic financial budget. Creating a planned budget is a big step that can slowly establish a financial safety net for yourself as you save more money over time and avoid late bill payments. In theory, if you properly follow a financial budget you create, and it works one month, then that trend should continue in the months to come if you stay true to it. This of course may not take into consideration the affects of a recession or financial emergency, unless this is accounted for through a recession proof, and tight budget. Not too many people enjoy looking at their own bank and credit card statements to audit their spending habits. However, you may end up feeling better once you have a clear view of your financial situation, with an idea of the specific areas you want to cut and the direct affect of those decisions. You may feel more in control now that you’ve taken the reins, and it may actually help alleviate some stress with a plan in place.
Revisit Your Spending
Take a thorough look at your spending. Pay particular attention to all of those little purchases that appear; a shot of espresso here and a restaurant-bought sub sandwich for lunch there.
It’s not always easy to see how expensive grabbing coffee and food on the go truly is. If you eat out 2-3 times a week, that may not seem so bad to you, but when you realize you’re spending $50 a week, the financial impact becomes clearer. Your spending can seem even more wasteful when you do the math and realize that $50 a week is about $200 per month and $2,500 a year! What if you put that money towards your savings or credit card payments? Do you think you would have still missed the same amount of bills, or made late bill payments of the same magnitude?
Little Charges Can Be a Big Expense
Be sure to pay special attention to all of those “tiny” $9.99 to $15.99 charges that show up your bill every month. This includes Amazon Prime, Spotify, Netflix, Uber Eats Pass or even BarkBox and the Dollar Shave Club.
When you add them all up, how much do you think you’re spending? If you let the number of services you subscribe to get out of hand, it can start to add up and cause a cash shortfall every month. Is a similar situation happening to you? Do you have unused or nonessential subscription services that can be paused or cancelled to avoid making late bill payments at the end of a tight month? Or perhaps services that you can cancel entirely to avoid the future consequences of late payments in the long run?
4. Establish a Financial Safety Net
As we covered earlier, sudden and unplanned expenses may force people to have to pay their bills late. When an extra few hundred dollars need to be “found,” you have to make the difficult decision of what gets paid this month and what will have to wait for the next pay period… or the one after that.
This is when an emergency fund comes in handy. This is a savings account that’s specifically designated to help you take care of unexpected expenses that may come your way. It should be your first line of defense when faced with an emergency expense. But not everyone has one at their disposal. So, where do you turn?
You may also consider applying for a line of credit to deal with unexpected expenses in dire situations that have you crying out “I need financial help immediately.” This would give you access to revolving credit, where you’re only charged based on what you withdraw. Having a line of credit available for emergency expenses may help you bridge the gap if you’re short on funds. Extending a line of credit in the case of an emergency gives you a bit more time to get your finances in order.
If this is not the first payment you’ve missed recently, you may have damaged credit and have difficulties qualifying for a line of credit. However, that doesn’t mean you’re out of options.
5. Talk to Someone
Despite money being a fairly universal stressor, too many people may suffer through their money problems in silence. This can cause feelings of anxiety and isolation.
Friends and family may be willing to help wherever they can. That help may not necessarily mean loaning you money or offering any sort of direct emergency financial assistance. Help could come in the form of someone referring you to a great financial advisor who helped them. Or it could be them telling you about an amazing new affordable cell phone plan that they just switched to. Or, it could simply take the form of being there for you and being a sympathetic ear in your time of need.
It never hurts to look into what type of resources are available in your area to help you manage your money better. There may be not-for-profit credit counselors in your city who can help you fully assess your financial situation, show you all of your options, and help you come up with a plan.
In Summary
In any case, the last thing you want to do when finding yourself in a financial bind is to be too hard on yourself, even if you’re in this situation because of overspending. This is not a reflection of who you are as a person or your value. Beating yourself up will likely only make matters worse by filling you with shame, which may keep you from reaching out for the help you may need.
You can recover from this and get back on the right financial track. You simply need to:
- Prioritize your current bills
- Set up payment arrangements elsewhere
- Establish why this happened
- Take steps to prevent this from happening again with a financial safety net
- Reach out for help
You can recover from this. And the more active you are during this process, the more you can do to prevent it from happening again.
Disclaimer: This article provides general information only and does not constitute financial, legal or other professional advice. For full details, see CreditFresh’s Terms of Use.
[1] https://www.thebalancesmb.com/failure-to-pay-child-support-penalties-2997972
[2] https://www.insurancepanda.com/faq/what-if-my-car-insurance-payment-is-late/
[3] https://www.nerdwallet.com/blog/finance/unpaid-debt-collections/
[4] https://www.gobankingrates.com/banking/savings-account/exclusive-covid-report-40-americans-less-300-savings/
