What Happens When You Can't Pay Your Bills?

Paying bills shouldn't be neglected.

Every month, most people take money out of their paychecks or other income sources and send it where it needs to go. Utilities, rent, car payments, mortgages and credit cards are just some of the bills the average person has each month. If for some reason you can't pay your bills, there are a number of things that can happen helpful and hurtful.

Reminders

The first thing that will happen when you can't pay your bills is a reminder or two. Let's use a power company as an example. If you get your power bill on the 14th of June, you typically have 30 days to send in a payment of some kind. Depending on how much your power bill is, the company might take a payment as little as 1/4 of the total owed. If you don't send in anything during that 30-day period, you will probably get a past due letter. You will get a couple of these over the next few weeks and you may get phone calls as well. The power company will encourage you to call and at least make some sort of payment arrangement.

If no arrangement is made, and 60 to 90 days passes, you will usually get a disconnect notice. By this time, you will have two choices and that is let your power get shut off or pay the bill in full. When you have a disconnect notice, you've usually waited too long and the company won't let you make a payment arrangement anymore so it's a better idea to pay as much as you can as soon as you can before this happens.

Disconnection

For utilities and cable/phone/internet providers, if you can't pay your bill for an extended period of time, they will stop your service. This is commonly called disconnection. Your power, water, garbage pickup, cable, Internet, and phone service are all subject to disconnection if you haven't made a payment in a while.

If you live in an area that gets very cold, the power company may keep your power on, especially if you have small children. It will eventually get disconnected if you aren't making payments, however. Cable and phone providers aren't as relaxed and will shut you off if you aren't in communication and making some type of payment.

Most companies are more than happy to work with you and can extend your payment date by up to 30 days if you've lost a job, had a medical emergency or something else has come up where you are left unable to pay.

Disconnection is the last resort by the company because it doesn't really want to do it. If you are disconnected, it's lost revenue. The company prefer that you set up a payment arrangement instead.

Eviction

When it comes to not paying your rent, it can ultimately lead to eviction. Eviction is basically the landlord or property management company telling you to find a new place to live. They may give you as much as 30 days or as little as three days and may decide to evict you via law enforcement.

Eviction can be a devastating force on a family. It could lead to you being temporarily homeless, your children may have to change schools, and the property managers could even take you to court to collect their money.

Repossession

Repossession is when a company you haven't paid hires someone to recover what technically belongs to them. This is most common with cars and rent to own items. If you get a television and entertainment center from a rent to own business and stop paying them, they will call you a few times to remind you but after 30 days usually, the company will simply ask for the merchandise back

The same applies to vehicles. If you stop making payments on your vehicle, eventually it will get repossessed. It's a good idea to give the repossession people the keys to the vehicle instead of arguing and forcing the company to tow it. This shows the finance company that you are cooperative and will hold that vehicle for you until you can make payments again or work out a new arrangement.

Wage Garnishment

Wage garnishments are the last resort for various companies that you owe money to. If you owed a power company $600 in January and get disconnected, if you show no signs of paying them any money, it will send your information to a collection agency. The collection agency will call you very often and if you ignore them, eventually this can lead to wage garnishments. The usual garnishment amount is 25 percent of your net pay every paycheck.

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