What To Do If You Can't Pay The Bills

I know I've spent a lot of time explaining how to pay off your debt, and a little time explaining how to avoid student loan debt. It struck me as I was getting ready to write this post that some people, more in this economy, that are reading this might not be able to keep up with their debt.

There are a few things you can do to try and get your debt payments to a manageable level.

Work More I know this sounds like a no brainer, but you would be surprised at how many people don't really consider this option seriously. Get a part-time job. This isn't allows applicable, and if you are out of work anyway you might be laughing at this step.

Schmooze the Student Loan People Work out a lower student loan payment. If you owe your payments to the government, they have several options that will help you to temporarily lower or suspend your payments. This step may wind up adding to the overall amount of the loan, because lowered or deferred payments continue to accrue interest which is added to the overall loan amount if the monthly payment doesn't cover it.

Negotiate With Creditors Contact individual creditors and try and work out a payment schedule or a lowered interest rate, or even just skipping a payment or two. Creditors will usually work with you if you contact them before or at the beginning of your financial hardships. They don't want to eat the loan any more than you want to default on it. If you know you will be able to resume normal payments in a month or two, give your creditors a call. Many times they can work something out that won't harm you credit score.

Credit Counseling Work with a non-profit consumer counseling agency. In many cases they can get interest reduced or even halted. If you can't make it any other way try this first. I'm a firm believer in not filing bankruptcy, so this is a last resort method. Consumer Credit Counseling Services is a national program that I have experience with and they really can work it out for you to be able to pay your bills.

Regardless of where you are in trying to get a handle on paying your bills, take a day and make a list of all of your creditors and how to contact them. If the letters and phone calls don't stop because you are behind, contact each one individually via certified mail asking them to stop contacting you. This won't make the debt go away, and may even make it harder to reach a settlement down the road, but not cringing every time the phone rings or slinking off to answer it when you have company is well worth it.

Next time, I'll put up a post explaining how credit counseling companies work and what to look for as well as how to spot a bad one.

**PS** As crazy as this sounds, don't bother with a debt consolidation loan, even if you could get one. Studies show that most people deeply in debt who consolidate wind up right back in debt, and usually with higher debt.