If you have recently lost your job or are no longer making as much money as you used to, you may find yourself unable to pay your bills. Some debtors ignore debts they cannot pay; this practice leads creditors to take action against them to collect the debt and damages their credit. However, many creditors will work with debtors to resolve unpaid bills, and low-income debtors can also receive help with vital services.
Payment Arrangements
Many creditors are willing to make payment arrangements with debtors who are experiencing financial trouble. If you are having difficulty paying your bills, contact your creditors as soon as possible. Explain the situation and ask to make arrangements. For example, you may be able to pay a certain amount every week or pay period until your debt is paid back. Making payment arrangements works best if you do not incur any new charges until your account is current.
Negotiations
If you cannot pay a debt back, you may be able to negotiate with creditors to settle your account. Through negotiation, you may be able to pay back part of your debt in exchange for the creditor discharging the rest of your debt. You can negotiate with creditors on your own; however, you may wish to retain an attorney for negotiation proceedings, as attorneys lend credibility to negotiations and can often get better deals than you could obtain on your own.
Credit Counseling
Credit counseling can help you set up a realistic budget, so that you can afford to pay your debts back, and teach you financial skills to help you avoid incurring new debts. In addition, many credit counseling agencies offer debt management programs. Debt management allows you to consolidate all your debts and make one lump-sum payment each month to reduce the amount of debt. You can often settle debts for less than you owe through debt management.
Government Programs
Both federal and state governments offer low-income customers assistance with paying utility bills. Some utility services offer lowered rates to customers whose income falls below a certain level; in addition, the Low Income Home Energy Assistance Program (LIHEAP) assists low-income customers who are threatened with disconnection because of nonpayment of electricity bills. Apply for government assistance with utility bills through your local Department of Human Services office.
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