For more information, contact your county Extension office. Visit http://www.aces.edu/counties/ or look in your telephone directory under your county's name to find contact information.
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Printed from the website of the Alabama Cooperative Extension System · http://www.aces.edu
| What To Do If You Can't Pay Your Bills |
If you are swamped with bills, go ahead and take action. Don't wait until they are so bad you cannot do anything about them.
Before you decide to do this, you may want to take another step. Go see a credit counselor.
Prepare for seeing the credit counselor by figuring your income and your outgo.
I. How much money do you have coming in on a regular basis?
It may be from:
You may be getting money from only one place. Or, maybe you get it from several.
Make a list of where you get your money. Put how much you get in the column that shows how often you get it: weekly, twice a month, monthly, or once a year.
List the amount you get in your paycheck or pay envelope after deductions are taken out. Deductions taken out might be taxes, insurance, union or other dues, social security, retirement, or savings.
List money earned by all members of the family. You may wish to list money earned by children, too, if it is used to pay some household expenses.
Here is a form you can use:
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| Where From | Weekly | Twice a Month | Monthly | Yearly |
| Total | ||||
II. How do you spend your money?
How much and what are your fixed bills, such as rent or house payments, insurance, and debt payments?
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| Expense Items | Amount |
| Housing (rent or mortgage) | $ |
| Utilities-Gas | $ |
| Electricity | $ |
| Water | $ |
| Telephone | $ |
| Others | $ |
| *Insurance-Life | $ |
| Accident and health | $ |
| Auto | $ |
| Others | $ |
| *Taxes | $ |
| Car payments | $ |
| Installment loans-furnishings and appliances | $ |
| Credit cards | $ |
| Other debt payments | $ |
| $ | |
| $ | |
| $ | |
| Allowances (personal) | $ |
| Others (list) | $ |
| $ | |
| $ | |
| $ | |
| Savings | $ |
| TOTAL FIXED EXPENSES | $ |
| *If taken out of paycheck, do not list here. | |
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| Expense Items | Amount |
| Food | $ |
| Clothing | $ |
| Transportation | $ |
| Contributions | $ |
| Personal care | $ |
| Medical expenses | $ |
| Recreation | $ |
| Household expenses and supplies | $ |
| Gifts | $ |
| Others | $ |
| $ | |
| $ | |
| $ | |
| $ | |
| $ | |
| $ | |
| TOTAL FLEXIBLE EXPENSES | $ |
III. What are your resources and plans for emergencies?
These can include unexpected medical bills, large repairs, etc.
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| Loans | $ |
| Savings | $ |
| Other | $ |
| $ | |
| $ | |
| TOTAL RESOURCES | $ |
Take these forms with you when you go to the credit counselor.
When you know what you are able to pay on the bills, talk to your creditors. Tell them you want to make smaller payments and pay over a longer period of time. Most of them will try to help you out if you show you are sincere and willing to pay. Remember, though, taking longer to pay will usually cost more in the long run.
BE SURE to get any new agreement in writing. Then stick to the agreement.
A credit counseling service helps people work out a plan for getting out of debt. A credit counselor will help you look at your money management.
Some counselors will help you work out a repayment plan and contact your creditors. You will pay the counselor a monthly payment, and the counselor will use that money to make your credit payments. Agreements are made with your creditors. They will allow you to pay off the loan in smaller payments. Credit counselors may charge you a fee.
Financial counseling may be available from:
A credit counselor can:
If you work with a credit counselor, you must:
If you fail to follow through, the program will be stopped, and creditors may begin to take legal action.
Before using the credit counseling service, be sure you know:
If you have tried everything else and have finally decided to file bankruptcy, wait. GET A LAWYER. The Wage Earner Plan, Chapter 13 of the U.S. Bankruptcy Act, might be a solution to your problem. If you own a house, car, and other assets, you can keep them under Chapter 13. You will pay off your debts under a plan. The plan will be set up by you and your lawyer, and approved by the court. Creditors will not be able to bother you as long as you stay with the plan.
If Chapter 13 also fails, then filing for straight bankruptcy is your legal release from your debts. This is not an easy way out, but a last resort.
When filing bankruptcy:
Bankruptcy remains a part of your credit file for up to 10 years. Bankruptcy is a court action and as such remains in court records. Court records are public documents. Going bankrupt can hurt you when you try to get credit in the future. It can also keep you from getting some jobs. These are some of the reasons why going bankrupt should only be done as a last resort.
For more information, contact your county Extension office. Look in your telephone directory under your county's name to find the number.
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