Dealing With Your Creditors When You Cannot Pay Your Bills

Couple looking stressed while working on finances
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Falling behind on your bills can be one of the most stressful things in life. You may find yourself in this situation due to a job loss or other life change. Whatever the reason, when you cannot afford to make your payments, you need to work with your creditors to find a suitable payment plan.

There are several other important steps you should take to mitigate the damage that can come from payment delinquency. Follow these steps if you find yourself unable to meet your financial obligations.

Create a Budget and Prioritize Spending

First, you need to sit down and look at your budget. During this process, prioritize your bills and the order in which you are going to pay them. You need to meet your basic needs first: food, housing, utilities, and transportation costs.

Next, you need to prioritize your spending. Entertainment, vacations, and eating out all need to be put on the back burner when you aren't able to pay your bills. Additionally, you should try to keep your grocery bill low. Try substituting fresh fruits and veggies with cheaper canned versions, buying on sale, and clipping coupons. It's wise to adopt a bare-bones budget and cut your spending as much as you can until you can improve your financial situation.

Determine What Is Left for Debts

Look at the amount you have left after you have met your basic necessities. Compare this to the amount you owe to creditors each month. If these amounts are equal, or if you have extra money after your debts are met, then you are in better shape than you thought. All you need to do is stick to your budget and continue to pay your debts each month.

If you do not have enough each month to meet your obligations, you will have to try another strategy: cutting your budget even more, changing your living situation (moving in with family or friends or renting a cheaper place), or setting up a discounted payment plan through your creditors.

Try Setting Up a Payment Plan

If you cannot pay the full monthly amount on certain debts, contact your creditors and explain the situation. Ask them if they can temporarily lower or suspend the payments until your financial situation improves. You may also write a letter to your creditors and explain how much you can pay them each month. It may help to include a copy of your budget so they can truly see your financial situation.

These steps may not stop your credit from being damaged, but they are good-faith efforts to pay as much debt as you can. They may also help you if your creditors take any legal action against you for failing to pay your debt.


Document all calls with creditors and debt collectors, and send all letters via certified mail so that you can prove that you sent them. 

Find Extra Money

Putting it simply, if you find yourself in a position where you cannot pay your bills, you need to get caught up as quickly as possible. In addition to adjusting your lifestyle, this may mean taking a temporary part-time job to make the extra money you need to cover payments.

You may also need to make big changes to what bills you owe each month. If your car payment is putting too much strain on your budget, selling your vehicle may help you get caught up. Take an inventory of other items you might be able to sell and consider using eBay or Craigslist to see if you can raise money to help you cover your expenses.

Stay Current on Your Mortgage

Regardless of your financial situation, you should continue to make full payments on your mortgage, even if it means not paying on credit cards. Losing your home would only make your financial situation worse. If you fall behind on your mortgage, work to catch up before you worry about the rest of your bills.


Your mortgage company may be able to decrease your monthly mortgage payment or help you refinance.

Other Tips for Dealing With Creditors

  1. Be proactive: Most credit card companies and banks will not settle debts with you until you are several months behind. However, informing them of your current situation may help you because they can temporarily lower payments or reduce interest rates.
  2. Be persistent but patient: When you contact creditors, calmly explain the situation. Being polite and respectful will be more beneficial than yelling and screaming. If you need to keep asking for a manager until you speak to someone that can help your situation, do so.
  3. Stand your ground: If you are receiving collection calls, explain the situation and your plan. If your creditors harass you, simply hang up the phone. That kind of treatment isn't acceptable, even if you are behind on your bills.
  4. Stick to your plan: Although it is frustrating to not have extra money, it is important that you keep a strict budget until you improve your financial situation, either by finding a new job or changing your lifestyle.
  5. Consider selling your home: If your house payment is too much for you and the bank won't lower your payment, then you should sell it before it enters foreclosure. This alone can relieve a lot of your financial pressure and stress.

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