Reduce the Damage of Not Paying Your Bills

by Staff Writer

Which bills should you pay first?

If you have any type of debt, paying those bills is very important. If you don’t, your credit will be adversely impacted and in the long-run you will end up paying more for that debt as a result of increased interest and fees for being delinquent.

But, what are you to do if you just don’t have enough money to pay all of your bills?

Personal loans for debt are an option, but usually are only obtainable for people with above average credit. And if you have significant debt, it’s likely your credit is already hurting. Outlined below is a tutorial that will help you reduce the damage if you are not able to pay your bills.

Should I Consider Bankruptcy?

Filing bankruptcy is the end consequence for millions of Americans annually. You should steer clear from bankruptcy if you can help it, since the impact of a bankruptcy on your credit report is VERY bad and LONG lasting. Filing bankruptcy would be a radical step if your bills are not overwhelming and/or you feel your financial situation is going to improve.

Before considering bankruptcy, see if you can create a plan for paying your bills with the development of a budget. A good budget will clearly outline how much money you can pay for what and when . . . hopefully allowing you to pay enough on your accounts and therefore giving you time before your accounts are sent into collections.

Never Disregard Your Debt Problems

Unfortunately, many consumers in a monetary rut look the other way, neglecting to accept their problems. Ignoring your debt will eventually create a worse situation for you. For instance, paying a cable bill instead of the rent or mortgage simply because you are being hounded by the cable company for a late account. It is even common for people to stop paying their bills altogether just because they are not able to make payments for all of them.

Bottom line – pay all of your bills. If you can’t, then prioritize. That means determining which of your bills is more important for your well being. Not paying your cable bill will result in your cable being shut off. But, if you don’t pay your housing bill, you’ll eventually have nowhere to live.

Understanding the Consequences

Lenders and creditors use your credit score to determine your credit worth. Any time you make a late payment, your credit score is going to be negatively impacted. Credit scores are extremely vulnerable to ‘lates’, but usually you will have to be late by more than 30 days for creditors to be able to report your poor account activity to the credit reporting agencies.

The greater the amount of late accounts you have and the longer you are delinquent, the worse your credit score will become. This consequential damage can leave its mark for several years. However, the instant you begin to take the steps for settling your bills and getting your financial well-being back on track, the quicker you can expect your credit to improve.

It is important to note that some late payment accounts are going to have a more significant effect than others. For instance, not paying your rent can result in your landlord beginning the process of eviction. This only takes a few weeks’ time, and getting evicted means having no place to live. Mortgage and car loans are also extremely precarious. On the other hand, personal loan lenders, credit card issuers, cell phone carriers and most utility companies usually will wait a couple of months prior to sending your accounts to collections.

Comprehending the significances of failing to pay bills will enable you to create priorities. Bills that are considered fundamental to your ability to live and work include your housing payments, utilities, car loans, food, gas, etc.. . On the other hand, cable, Internet and cell phones are a few examples of bills that are not necessary for survival and can be put off being paid if absolutely necessary.

Photo By meddygarnet

{ 1 comment… read it below or add one }

Carol@inthetrenches January 2, 2012 at

Although I would never recommend that someone intentionally mess of their credit it is not necessarily the worst thing that can happen and unfortunately sometimes is inevitable. I can think of at least 7 Good things about a Bad credit report and posted them. If it has happened to some of your readers it’s not the end of the world. The credit reporting companies are just another extention of the banking industry and they have pulled a dirty one on the American people.
http://inthetrenches2009.blogspot.com/2010/04/seven-good-things-about-bad-credit.html. An even more important goal than having a good credit score is getting out of debt and not going back in.

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