Talk to The Company
- When you’re having a tough time, the last thing you want to do is call the company you owe and talk about it. However, avoiding the company limits your options and automatically puts you at risk of the worst possible consequences. Many of your billers are willing to work with you, but you have to talk to them to find out your options. For example:
- You may be able to get an extension on your due date. This would push your due date back a few days giving you additional time to make the payment.
- Your creditor may allow you to set up a payment arrangement, where you agree to pay all or part of your bill on a certain date or in installments. Your creditor may set up automatic payments from your checking account to solidify the payment arrangement.
- You may be able to go into forbearance or deferment on your loans. This will temporarily reduce or suspend your loan payments. Interest may continue to accrue while your payments are suspended and any unpaid interest can be added to the balance of your loan, increasing your remaining payoff time.
Make The Payment As Soon As You Can
The further you get behind on your payments, the harder it is to catch up. If you can make up the missed payment before your next payment due date rolls around, the past due amount will still be relatively affordable. However, if you wait until the next due date to catch up, you’ll have to make two payments instead of one.
With credit cards and loans, catching up on missed payments is important to protect your credit score. Late credit card and loan payments are reported to the credit bureaus once the payment is 30 days late. If you can catch up before that, you’ll still have to pay a late fee, but you at least avoid a blemish on your credit report.
You May Have To Juggle Other Payments
Some late payments are worse than others. If it seems like you’re not going to be able to make all your payments this month, review your bills to decide what you must pay and what can wait.
- While you try to figure out what to pay, here are a few things to consider:
Some loans have a payment grace period after the due date. If you make your payment within the grace period, you avoid late payment fees.
- Rent payments often have the highest late fees and the strongest consequences of being late, i.e. eviction. Prioritize your rent payment over pretty much every other payment.
- Many monthly services are billed a month in advance and your services may not be disconnected until you’re more than a month behind. Be careful, though, if your services are disconnected, you may have to pay an expensive reconnection fee to have your services reestablished.
- Your mortgage lender may start the foreclosure process after as few as one missed payment. The same thing goes for auto loans and repossession.
What Not to Do
The worst thing you can do when you’re about to miss a monthly payment is nothing. As long as you do something, you’re on the right path. The situation is not going to correct itself and by doing nothing, you risk facing the worst possible consequences.