|Terry Rigg is the editor of the Budget Stretcher Newsletter. The
Budget Stretcher Newsletter is published monthly and is loaded with
information that will save you time and money everyday. Go to
http://www.homemoneyhelp.com for more information.
is extremely difficult to setup a budget, especially when you are
behind on some of your bills. Even if you can make your regular
bills and expenses fit neatly into your budget, what can you do if
you don't have the money to catch up?
I have listed several methods and
circumstances below that may help manage setting up your budget and
begin to pay those overdue bills. Since there are as many different
budgets as there are people that try to set them up, this list may
not be all inclusive. It may, however, give you some ideas that will
fit your individual problem.
Unless you don't have any income at
all, there are a couple of things that should never be late. Your
rent or house payment and utilities should be paid first, even at
the expense of other bills. This is simply a matter of survival.
The first thing you need to do when
setting up a budget is to determine how much actual take-home income
you have. Then determine the amount of your normal bills and
expenses. The Complete
Budget and Bill Organizer explains this in greater detail and
provides forms to put it on paper.
The below methods assume that you
have enough money to cover your normal bills and expenses but have
some bills that have an amount that is overdue:
When you are setting up your budget
and have overdue bills you need to cut your expenses to the bare
bones. This doesn't mean going without food. However, there are many
ways to cut back on expenses. You can find hundreds of them by
visiting my Budget Stretcher Partner sites listed at http://www.homemoneyhelp.com.
You should always make the initial
contact to the company any time you aren't able to pay a bill on
time. Once you have your budget setup, see if there is any money
left over to start paying the amount that is behind. If you do have
some money left over, when you contact the company, find out if they
will accept paying a little extra each month, without penalty, until
the overdue amount is paid in full.
Contact a local Consumer Credit
Counseling Service. You can find them in your phone book. They can
assist you by contacting your creditors and establishing a payment
schedule that will fit your budget.
If your overdue bills are credit
cards, consider transferring your balances to either a credit card
you already have or can obtain. This will do a couple of things. It
will normally lower your monthly payment and it will eliminate your
overdue status. Be extremely careful doing this. The credit card
companies you paid off will be using every means they have to get
you to use their credit cards again. Cut them up and notify the
company to close the account.
Look for ways to get extra money just
for the purpose of paying your overdue bills. This can be either a
temporary part time job or selling something that you can do
If you own your home and have equity
in your property, you may want to consider a bill consolidation
loan. While this seems like an easy out, many people start obtaining
more debt after they receive the loan since they have some disposable
income. There are pros and cons to bill consolidation
loans and you would be wise to investigate it thoroughly.
If you have exhausted all of the above
options, you may have to consider one of the below options. You must
remember that filing bankruptcy can stay on your credit history for
up to 10 years and can have a devastating effect on your future
In extreme circumstances, and always
as a last resort, consider filing Chapter 13 bankruptcy protection.
This allows an individual to setup a repayment plan of between 3 to
5 years to pay off all or part of their debts. You must have
sufficient income to permit a portion of it to be used toward your
Another option is Chapter 7
bankruptcy which is the most commonly filed chapter since it can
completely eliminate all of your debt except the ones you choose to
continue paying. There are exceptions to debts that can be
discharged and to what property is exempt from being taken by your
creditors. You should discuss any bankruptcy actions with a
competent bankruptcy attorney. Only individuals may file for
chapter 7 or chapter 13 bankruptcy.
Just because you are behind on your
bills doesn't mean that your bill collectors can do whatever they
want to collect their debt. You have rights under the Fair Debt
Collection Practices Act. It would be a good idea to visit The
Federal Trade Commission's web site to find out what your legal