Bills—How to Deal with Bills You Cannot Pay
Call anyone you cannot pay and explain your financial solution (job loss, illness) and have documentation to support your case. Then propose a resolution; most creditors will work with you.
What bills you should pay first:
First, pay essential living expenses such as the mortgage or rent, food, and electricity, heat and water bills.
Then, cover work-related costs (child care) and any secured debts (car payments), and legal obligations (child support, taxes).
After making these payments, tackle the credit card bills with the remaining funds.
How long can you put off paying bills:
Mortgage: If you fail to pay, the bank can begin foreclosure in as little as three months
Car loan: A lender can repossess your vehicle if you're a day late, but most will wait about 60 days
Credit cards: After about six months of missed payments, credit card companies start to send your account to collections.
Tax debt: Technically, there's no "grace period," but ask about an installment plan. The IRS can eventually garnish your wages and seize property or bank accounts.
Student loans: Lenders will wait about nine months before placing a federal loan in default. Starting in July, graduates can opt for a loan program that bases payments on up to 15% of your annual gross income. (See ibrinfo.org for more information.)
“Unpaid bills: How long can you put off paying?” USA Weekend. April 24-26, 2009. Page 4.
“What to do if you can’t pay your bills.” USA Weekend. April 10-12, 2009. Page 6.