I Can't Pay My Bills: What to do & Where to Get Help

I Can’t Pay My Bills

A counseling session with a certified credit counselor can help you effectively manage your money so that you can pay your bills. Counselors may recommend a debt management plan to consolidate your debt, reduce the interest and have a lower, more affordable monthly payment.

Help for Unpaid Bills

The coronavirus pandemic is a stunning reminder to American consumers that anybody can get caught in a financial bind.

Every rung on the economic ladder was affected as the stock market plunged; conventions and sporting events were cancelled; and workers in hotels, restaurants and bars were sent home to stop the spread of COVID-19.

A sudden realization came to those who lost their jobs or saw their hours significantly reduced: There is more money going out than coming in.

So, how do you manage when you can’t pay your bills?

Long (agonizing) story short: You need a strategy and here’s one that should help you.

Step One: Prioritize Your Bills

Some bills are more easily put off than others. Some missed payments can lead to disaster quickly. The key is knowing which is which?

We begin with Psychology 101, specifically Maslow’s Hierarchy of Needs. Laid out in a pyramid, Maslow says needs lower in the hierarchy (food, shelter, rest, warmth) must be met before needs higher up (security, belonging, esteem) can be satisfied.

The same applies to your struggling budget. Look first and foremost to your essentials, which come before anything else, including cell phone, cable and internet service.

Priority One Bills: Essentials

  1. Food: Whatever else, you must feed yourself and your family.
  2. Housing: The roof over your head. Home, sweet home. The proverbial castle.
  3. Utilities: Power (electric and, sometimes, gas) and water are fundamental to human existence.

Next comes Everything Else. But, wait. Where food, shelter and utilities might arrive in a virtual dead heat, items in the “Everything Else” pot are not created equal.

Here’s how you should prioritize them.

Priority Two Bills:

  1. Taxes (Income & Property). Neglecting the former could cost you wage garnishments, property seizures and, conceivably, your freedom. Neglecting the latter could cost you your home.
  2. Child support. Again, the government is watching. Not only will you put custody and/or visitation at risk, failure to hold up your obligation can lead to wage garnishments, bank account invasions, even jail.
  3. Car payment — especially if your vehicle is essential to getting to work.
  4. Insurance. There are financial and, in some cases, legal risks to letting policies — homeowner’s, renter’s, auto, health — lapse.
  5. Credit cards. If possible, at least keep up the minimums.
  6. Medical bills. If you have to stiff anyone, your medical provider(s) just might be the ticket. These bills tend not to accumulate interest, and nonpayment is less detrimental to your credit score.
  7. Student loans. Lenders have programs to forbear, defer and sometimes even forgive payments for borrowers who can demonstrate money is tight.

Face Your Debts

Ignoring the problem isn’t helpful. Yes, financial anxiety, exacerbated by collection agency calls, can precipitate assorted health troubles: lost sleep (or too much), improper eating (too much, not enough), drink or otherwise self-medicate excessively, even cause depression and worse.

But denial won’t fix any of that.

Instead, confront the problem, gain a realistic view of your financial condition, and resolve to take action. If you are  hopelessly insolvent, consider some form of bankruptcy. If you’re merely desperate, try consulting a nonprofit debt counseling service.

If you can see a way out on your own develop a plan, and then begin contacting your creditors to see about relief. Maybe all you need is a to make a realistic budget that (a) honestly weighs your income and (b) carves out excess spending.

Be prepared to describe your circumstances, backed up with facts, figures and, in each case, a realistic proposal. If they decline, you’re no worse off than you were. But you may be pleasantly surprised with lower interest rates, late fees waived, more time to pay, or even a discount on your balance(s).

In short, get busy imagining and acting on a new life.

I Can’t Afford Food: What Do I Do?

You gotta eat. That’s fundamental. Of course, within this demand, smart, thrifty choices can and should be made. Stretch your grocery dollar with coupons in the newspaper, at the store, online, or with apps.

There also are low- and no-cost grocery options for working families and individuals. Learn about those opportunities in your community by contacting nearby churches, food banks, or the local chapter of United Way, or by visiting www.feedingamerica.com.

Look into your state’s SNAP program, formerly known as food stamps, to see if you qualify for help.

When You Can’t Pay Your Mortgage

If you simply cannot afford your mortgage payment, and you are unable to reach an accommodation with your mortgage lender, you need to prepare to make alternative housing arrangements.

In the interim, contact your lender. Explain your situation. Are you in a temporary bind? Because your mortgage holder doesn’t want your house. It’s a liability to the lender, so there’s a chance they’ll work with you.

Prep for your call by gathering info on your income, expenses and other assets. Be ready to explain why you’re unable to make your payment(s), and whether your setback is temporary.

If you’re a member of the military who has received permanent-change-of-station orders, you may qualify for loss-mitigation options.

Lots of mortgage lenders have programs to help borrowers avoid foreclosure. Likely included in the process: filling out a mortgage assistance application. Once reviewed, your lender will let you know what options, if any, it will offer.

Next, find a housing counselor approved by the Department of Housing and Urban Development (HUD). The counselor can discuss your circumstances and whether you qualify for any programs or help. They can describe the options your lender offers and which ones best suit you. They also assist offer, at little or no cost, strategies for budgeting and other financial concerns that interfere with paying your mortgage.

The Consumer Financial Protection Bureau offers a “Find a Counselor” tool for a list of HUD-sanctioned housing-counseling agencies near you. There’s also the HOPE Hotline, which is always  available. Punch up (888) 995-HOPE (4673).

Possible remedies include refinancing, a loan modification, a repayment plan, forbearance, arranging a short sale of your home, or, if worse comes to worst, surrendering your home through a deed in lieu of foreclosure.

Pitfalls of the latter two options are that if your home sells for less than your mortgage balance, you will be responsible for any shortfall. If your lender forgives that shortfall, you may be obliged to pay taxes on the amount.

What Happens If I Can’t Pay My Rent

Like a hard-pressed homebuyer, a renter in a tight spot has a similar course of action. Begin by contacting your landlord the moment you know there’s going to be a problem. Hunkering down in silence helps neither you nor the landlord.

Explain your situation: how you’ve gotten into trouble, and your plan to fix it. Ask about breaking your rent into smaller payments over the course of the month. See if a reduction in rent is feasible.

Can you take on a roommate? Consider that.

Look into outside help. Call the local chapter of the United Way, or visit its website, www.211.org.

Study the terms of your rental agreement. Learn about the grace period, if any, for late payments, and what the penalties are. Also research the laws for your state to see how long you can delay before your landlord can begin the eviction process.

What Happens If I Can’t Pay My Utilities?

If you can’t pay your utility bills, know the rules for when utilities can shut off your electricity, gas or water for nonpayment. Generally, you have a couple of months of missed payments before utilities companies cut off your supply. However, persistently late payments can result in the utility requiring a deposit, or raising your existing deposit.

Utility companies typically give customers a week’s notice before service is shut off. Often, they’ll attempt to make contact the day before, as well.

As in virtually every case, contacting the company is a good start. Have your latest statement at hand so you can discuss your balance and also have your account number at the ready. Often, you can get an extension simply by asking.

Ask for a payment plan. Lots of utility companies offer them. Be honest with how much you can afford.

Investigate outside help. Begin with LIHEAP (Low Income Home Energy Assistance Program), a federal government program with local offices that assists families with energy costs.

What Happens If I Can’t Pay My Taxes?

This is serious stuff. Failure to pay Washington can result in stiff interest and penalties being pursued by the IRS. The agency has ferocious tools for collecting debt, including:

  • Filing a notice of a federal tax lien (a claim on your property)
  • Seizing your property
  • Confiscating your refund
  • Garnering your wages, your investments and/or your bank account
  • Filing charges for tax evasion

Fortunately, for taxpayers who play straight, the IRS offers a handful of options, including a payment plan, an offer in compromise and other efforts to help you get through this. Beware of advertisers who claim they can make your tax troubles go away for pennies on the dollar. Doesn’t happen.

What Happens If I Can’t Make Child Support Payments?

While the public and the media have little patience with genuine “deadbeat parents,” many who are responsible for making child-support payments fall behind because of financial hard times, not because they’re neglectful or frittering away their paychecks.

Still, the U.S. Census Bureau paints a bleak picture of how child support is working in America: of the 7.25 million custodial parents due child support, only 3.29 million — less than half — received the full amount owed. Oftentimes, there are legitimate reasons for the failure to pay.

If your circumstances have changed since your child-support order was filed, contact the Child Support Enforcement Office in the state where the order was filed. File a formal motion requesting a modification as a result of your altered situation.

Do not attempt to achieve a reduction in non-court negotiations that result in an oral agreement with the custodial parent; if push comes to shove, the courts will not recognize any modification it did not formally approve.

What Happens If I Can’t Make Car Payments?

First, some things not to do when you can’t pay your car payments.

Don’t turn the car over to your lender or allow them to repossess it. They don’t want it. They’re not in the vehicle resale business.

Your credit score will get pounded and you still won’t be off the hook. Once the car is resold, you’ll owe the difference between the sales price and what you owed on the loan (known as “the deficiency”); adding insult to injury, the lender will come after you for its repossession costs.

If you owe more on the car than it can bring in a trade, avoid dealerships, especially ones that want to make a deal for a new, less expensive ride. The balance between the trade value (essentially, its wholesale price) and your loan will get rolled into your new loan. Before you’ve even rolled off the dealer’s lot, you’ll be upside down, meaning you’ll owe more than the value of the replacement car.

Acknowledged: Under some circumstances, this arrangement might benefit you in the long run if it lowers your payment significantly.

The better course of action is attempting to sell the car yourself  and applying the proceeds to your loan. If there’s a balance, cover that with a personal loan.

For essential transportation while you get yourself back on your feet, consider public transportation (monthly passes are quite cheap) or shop for a reliable, low-cost vehicle that fits easily within your budget. Have it checked by a mechanic. If possible, pay cash and do your best to feed an emergency fund for repairs.

What Happens If I Can’t Pay My Insurance Premiums?

The need for insurance — medical, homeowner’s, renter’s, automobile — is pretty much a fact of modern life. In an emergency, having allowed your policies to lapse for nonpayment can be disastrous. But even if life hums along without mishap, there can be unpleasant ramifications arising from canceled insurance.

If your dwelling carries a mortgage, your lender will take out a policy to protect its investment, often at a higher price than your original policy, and tack the premium onto your payment.

The same goes for your car, unless you own it outright. But even if you own your car debt-free, most states require certain minimum coverage. If you can’t afford insurance, you can’t afford to drive.

In either case, if your premiums are too steep, check with your insurance carrier about the steps you can take to reduce your payments. If that doesn’t work, shop around for a new company.

What Happens If I Can’t Pay My Credit Card Minimums?

Being late on a minimum payment, or skipping it altogether, can trigger a financial avalanche — late payment penalties, and a spike in your interest rate — that only worsen your budget crisis.

Again, the worst course of action is inaction. Call your card issuer(s) and explain your circumstances. Without overpromising, let them know it’s a one-time occurrence (if it truly is). Let them know when you will be able to make your next payment.

Creditors sometimes will extend your due date, waive a late fee, and even continue to report a “current” status to credit bureaus.

Meanwhile, see if there’s any place in your budget you can squeeze or eliminate expenses to free up extra cash. Try to reduce cell phone bills, or cancel cable TV or streaming subscriptions.

What Happens If I Can’t Make My Personal Loan Payment?

See “What happens if I can’t pay my credit card minimums?” above. Similar advice pertains.

Know that if you fall several payments behind, your lender is likely to turn to a collection agency, or even take you to court seeking to garnish your wages or tap your bank account.

If the loan is secured, you could lose the collateral you put up in exchange for the money.

What Happens If I Can’t Pay My Medical Bills?

If you’re overwhelmed by medical debt, begin by making sure you’ve been accurately charged. It’s not uncommon for medical bills to contain errors. Review the explanation of benefits statement from your insurer for duplicate items, services you didn’t receive, services you don’t recognize and charges insurance ought to have covered.

Attempt to negotiate your bill by talking to your healthcare provider’s billing manager. Don’t wait. The sooner you begin the discussion, the better off you’ll be. If you can make a lump-sum payment that is only a percentage of the total due — even less than half — offer that in exchange for writing off the balance. Eliminating the hassle of pursuing full payment over months or even years might be worth it to the provider’s practice.

Consider enlisting outside help, such as medical billing advocates (insurance agents, nurses, lawyers, healthcare administrators) who will use their expertise to demystify the charges and contest excesses, as well as spot errors. Nonprofit debt counseling agencies are also worth considering.

What Happens If I Can’t Pay My Student Loans?

Student loan debt is an onerous thing. More than 44 million Americans owe a total of $1.4 trillion in student loan debt. The average repayment schedule extends 20 years. And roughly 3,000 people default on their loans daily.

Missing student loan payments can drag down your credit score, making it difficult, or at least more expensive, to borrow in the future.

If you’re in danger of falling behind on a federal student loan, you’re in luck: You have 270 days — about nine months — to make a payment before your loan goes into default.

Beyond that, however, the government can garnish wages (or a Social Security check), confiscate federal tax refunds, even disability benefits. In rare cases, the government can and will sue. It usually wins, and if it does, it can place a lien on your home, or even force a sale.

Private lenders can be aggressive in pursuit of borrowers in default, often suing in state courts.

Before it comes to this, seek a student loan forgiveness program that can work for you. If you work in approved public service, education, health care and certain other community-boosting areas, there’s a plan tailor-made for you.

You also can apply for income-driven repayment plans, or, under limited circumstances, seek deferment or forbearance, in which your payments can be paused without harm to your credit score for a period of months or even years.

What Else Can I Do?

If you’ve pared your budget to the bone and there’s still more going out than coming in, consider working on your income options: a second, part-time job, perhaps something in our burgeoning gig economy; prepare an argument for why you deserve a raise (Hint: It’s not, “I need more money”); consider changing jobs, or careers; beef up your education — a degree or certification looks great on your resume.

Take clothes in good condition you no longer wear to a consignment shop. The same goes for used furniture. Peddle idle, but serviceable, electronics on eBay or sites dedicated to preowned electronics.

If you live some place where parking is at a premium and you have space you’re not using, offer to rent it in online classified ad.

List that spare bedroom on Airbnb. Drive with Uber or Lyft. Catch on with one outfits in the growing delivery business such as Instacart, UberEats, Postmates or Amazon Flex.

Have skills in writing, editing, programming, design, marketing, photography or data entry? Try your hand as a freelancer through sites such as Upwork, Fiverr or Freelancer. Are you handy with tools? Check out TaskRabbit.

There’s never been more opportunity to score extra cash in ways that can fit into, or around, a full-time work schedule. Get busy earning and wake up from your nightmare of too many bills and not enough money.


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About the author

Tom Jackson focuses on writing about debt solutions for consumers struggling to make ends meet. His background includes time as a columnist for newspapers in Washington D.C., Tampa and Sacramento, Calif., where he reported and commented on everything from city and state budgets to the marketing of local businesses and how the business of professional sports impacts a city. Along the way, he has racked up state and national awards for writing, editing and design. Tom’s blogging on the 2016 election won a pair of top honors from the Florida Press Club. A University of Florida alumnus, St. Louis Cardinals fan and eager-if-haphazard golfer, Tom splits time between Tampa and Cashiers, N.C., with his wife of 40 years, college-age son, and Spencer, a yappy Shetland sheepdog.