Paying Bills: Help in Catching up When You’ve Fallen Behind

It can feel impossible to catch up on paying bills after you've fallen behind. But payment delays happen—sometimes you're hit with unexpected career changes, family emergencies, job loss or furlough, or other reason and suddenly your income simply isn't enough to meet what you owe in housing, utility, debt and other payments each month.

Falling behind on your financial obligations isn't the end of the world, but it can cause long-lasting financial challenges if you're not careful to catch up again as soon as possible.

If you're feeling overwhelmed by unpaid bills, mounting interest, late fees and more, here are some steps to help you start moving in a positive direction.

1. Make a list of bills missed and those coming due soon

The first step after falling behind on your bills is to start keeping careful track of which payments you're delaying, when each are due and whether or not you'll owe additional money for missing them. Getting organized will let you see exactly how much you owe so you can start making decisions on how to allocate your money and whether delaying additional payments (and which payment) is the right move.

2. Prioritize current and missed payments

After you have a list of everything you owe, order them by importance. This will help you focus your repayment efforts on the bills you feel are most important or carry the highest costs (i.e. interest rates or fees). And you'll want to be aware of any missed payments that could lead to significant legal or financial trouble.

Bills that allow you to keep a roof over your family's head are extremely important, so be sure your rent or mortgage payments are at the top of your list, followed by your food and utilities bills. If you cannot afford your mortgage or rent, speaking with a HUD-approved counselor may help; similarly, if you cannot afford to buy food, we recommend starting with the usa.gov/food-help resource page to find programs that may help. After these necessities, prioritize any work-related expenses, such as car payments or phone bills, and then focus on loans and other debts.

3. Talk to your creditors

Once you know which bills you're not able to pay, calling your creditors is a great next step. If you communicate with your creditors about your current financial struggles, they may be more flexible with repayment plans, including changing terms or possibly even penalties.

Even if you can't pay your bills, pretending they don't exist isn't your best strategy. Ignoring your bills can lead to penalties or higher interest rates and possibly damage your credit standing.

4. Make a budget and track your spending moving forward

Once you know how much you owe, it's time to track how much you're earning and review your monthly budget. Knowing how much cash is coming into your household and when the cash will hit your bank account will help you stay on track with your payment plans and allow you to catch up on some of your unpaid bills.

You can start your budget by creating two lists -- one with your sources of income and one with your expenses. It is helpful to sort them by fixed costs, like rent or car payments, and variable ones, like groceries, entertainment, and travel. Then you can sort your variable expenses into critical expenses (like groceries) and extras (like entertainment or travel). You can look to lower your variable costs and reduce any extras until your income and expenses are balanced.

After you learn how to make a budget, you'll want to track your spending to help you stick to it. This allows you to identify your spending patterns and see areas where you may be overspending.

5. Be wary of debt relief services

Debt settlement companies might offer deals that are tempting if you’re in a financial bind. They often claim they can renegotiate or change the terms of your debt. You’ll want to read these offers carefully and be sure to ask how your debt will be reported to the credit reporting agencies before you agree to a settlement. Thoroughly researching the debt settlement company before starting is a good idea; reviewing consumer complaints against the business, if there are any, is a good way to understand more about the business.

Falling behind on your bills is undeniably stressful, but with some organization, budgeting, and careful spending, you can have a better understanding of your financial situation, allowing you to make your plan to catch-up with your bills and get more control over your financial future.