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What To Do When You Can’t Pay Minimum Debt Payments

By Erik Folgate

There’s no doubt we have gone through some hard economic times, and some of you have had a hard time paying all of your bills each month. There’s no need to be ashamed of it or get depressed about it as long as you are working actively to reverse the situation. Here is a short step-by-step guide to helping you make the right decisions about your money and ways to help you stay current on your bills.

  1. First, pay your most important bills. Your mortgage/rent, utilities, food, and transportation costs should be your first priority to pay. Don’t pay your credit card bill before you pay for the utilities bill. Take care of you and your family first, then start paying unsecured debt payments.
  2. Second, brainstorm ideas for making extra money to stay current on debts. You can take a second job, sell a bunch of stuff, or start a side business (i.e. mowing lawns, consulting, cleaning houses). You must be proactive. The longer you sit and think about how you can’t pay your bills, the more your debts will pile up. Don’t dig the hole any bigger than it needs to be. Do whatever you can to scrounge up enough money each month to get those minimum payments made.
  3. Third, answer this question, “What will I do in the long-term to increase my income?” Do you need to take a class, get a promotion, take a job at a different company, or get a certification? You must have a long-term plan to increase your income. The reason you can’t pay your bills is either because you have an income problem, a spending problem, or both.

If you still can’t your minimum payments, then the next few months will be ugly. You’ll have to let go of some of your debts, and be prepared to get harassed by debt collectors. They will do anything and everything to intimidate and belittle you to try to bully you into paying them. Check out my guide to dealing with debt collectors here. Here is a list of debt payments to pay by order of priority:

  1. 1st Mortgage
  2. 2nd Mortgage/HELOC
  3. Car Loans
  4. Student Loans
  5. Credit Cards/Department Store Cards
  6. Other personal, unsecured loans

Remember, you are not alone and you should not feel ashamed. However, if you continue to spend recklessly, don’t get an a budget, and don’t work like crazy to make extra money, you should be ashamed that you didn’t make the effort to stay current on your bills. The most important step is to have a long-term plan to reduce expenses and increase your income. Do this and you’ll be ahead of the game. Then, you’ll be able to start the Money Crashers debt elimination plan.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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