Behind on Bills? 5 Common Situations and How To Handle Them

Are you among the many who are behind on bills? Are you worried about potentially losing some of your possessions? The truth is, such financial worries are quite common today.

Americans around the country want to know what to do when they get behind on bills.

Regardless of how well we manage our finances, many of us face some financial crisis during our lifetime, many of which are out of our control. Unfortunately, some situations are overwhelming and may require the help of a professional.

There are many kinds of debt problems. They can range anywhere from unpaid utility bills to mortgage payments and other debts in between. All it takes is a major unexpected expense, job loss, or injury. Before you know it, some of your payments are way past due, and the debt situation is out of hand.

While it can be tempting to put your head in the sand, you cannot ignore your debt. The debt isn’t going to go away by itself.

No matter how overwhelming, the best thing to do is address the debt issue promptly before it gets too out of hand. Otherwise, it can have a debilitating effect on your future, not to mention potential legal consequences.

So, what do you do?

There are many ways to deal with your debt situations, and the answer will largely depend on what kind of debt you’re dealing with. The good news is you can craft a plan to pay off your debt by using the right tools.

The plan you develop to get caught up on bills can vary depending on the type of debt, the amount you owe, and how long it has been delinquent.

Here are some of the most common situations and general guidelines for handling them.

Behind on Bills? 5 Common Situations

1. Behind on Utility Bill Payments

Getting behind on monthly utility bill payments is a common occurrence.

While these payments may typically be smaller than other kinds of debts, the timing is critical for delinquent utility payments because ignoring the situation will have dire consequences. Unpaid utility bills will quickly lead to disconnected utilities, penalties, and debt collectors.

If you’re in a situation where you are behind on utility bills and not sure if you’ll be able to catch up soon, you should get ahead of the situation by contacting the utility company.

Explain your situation to the company and request a payment plan you can manage. Most companies will work with you and be willing to set up a plan that will fit your financial situation.

Don’t be afraid to ask for leniency. Companies may even be willing to give you a lower interest or no interest period. They will certainly appreciate your effort to make the payment.

After all, they would rather get some of their money by helping you make the payment than getting nothing. It’s a win-win situation for both parties.

Related: 8 Ways To Save Money and Get in Shape

2. Behind on Your Mortgage

Getting behind on your mortgage payment can be very scary. It is likely your largest monthly bill, and it can be easy to find yourself in a seemingly insurmountable hole after just a few months.

Like getting behind on utility bills, you must get ahead of the situation by contacting your lender as soon as you realize there is a problem. If you let the debt go, you could eventually find yourself in thousands of dollars of delinquent payments and without a home due to foreclosure.

Most lenders will work with you by offering a period with a lower monthly payment. You may even be able to work out a short no-payment period.

Remember, in the case of a mortgage, the interest will continue to accrue, and you will still be expected to pay the entire mortgage balance eventually.

In this case, the lender is giving you a period at friendlier terms so that you can get a handle on your financial situation without negatively affecting your credit or incurring other penalties.

If you feel like you need assistance negotiating with your lender, the good news is there is no need to pay a private party. You can contact HUD (Department of Housing and Urban Development) for a certified counselor that will help you at no cost. Contact the local housing department to get started.

If you’re more of a DIYer, you can find many tools online at the Federal Trade Commission website.

3. Behind on Car Payments

Delinquent car loans are a different animal altogether. In many states, a creditor can repossess your car as soon as you default on your loan or lease. They can do seize your vehicle at any time, without notice, and can even come onto your property to do so. However, in most cases, you will be contacted as a courtesy.

If your car is repossessed, you will need to pay the loan balance to get the car back, including all incidental charges like towing, storage, etc. If you don’t, the lender will sell the car and recoup their losses as much as possible.

As with the other situations discussed, contact your lender as soon as you know that you may not be able to make your payment and see if you can work something out.

If you can’t work something out or know that you will struggle to make the payments long-term, it is likely better to attempt to sell the vehicle and use that money to help meet your loan obligations.

4. Behind on Student Loans

Getting help when you’re behind on student loan debt can be a challenge, and your options will vary depending on the type of loans you have.

For the most part, federal loans through the Department of Education have programs that may help alleviate some of the pressure from default student loan payments. You can apply for these programs free of charge and can find information about them at Student Aid.

Federal loans also have programs for loan forgiveness and cancellation. However, even if you qualify based on your occupation or other factors, successfully getting your loans forgiven is generally a long shot.

Private student loans, on the other hand, come with fewer options. Private lenders rarely offer loan forgiveness programs. However, private lenders may offer to help you consolidate loans or lower your payments.

Just be careful that you aren’t getting into a worse situation by extending the term, which results in more interest paid over the life of the loan.

Another option may be to refinance your private student loans to a lower rate, which will lower your payment.

Again, if you are behind on your student loans, look to find help as soon as possible and contact your lender to see if you can work something out.

5. What About When Your Debt Goes to a Collection Agency?

Some of you may be past the point where the above advice is no longer viable because your debt has gone to collections.

If you are blindsided by being contacted by a debt collection agency, the first thing you should do is contact the agency to make sure the debt is yours. The debt may have been delinquent for so long that you have forgotten about it, but in other cases, it may be unpaid bills from an ex or a fraudulent loan taken out in your name.

A word of caution; don’t reveal your financial information when talking with the collection agency. You don’t want to give them any information that they can use to go after other assets you may have.

Also, make sure you do your research. There are rules that debt collectors must follow. For instance, they must give you all the details to prove that the debt is yours, including the name of the entity you own money to, the amount, specific dates, and any other relevant information about you and the debt.

If you come to know that the debt is not your responsibility or there is some other reason you aren’t sure, respond to the collection agency in writing stating that it is not your debt. It is their responsibility to verify the details of the debt and get back to you.

If the debt is yours but is an old debt, check your state laws to see if they can legally collect it. Some old debt (time-barred debt) may no longer be eligible for collection.

The Federal Trade Commission site has all the rules and tips for dealing with debt collection agencies.

Other Options for Handling More Complex Debt Situations

Debt Settlement

Debt settlement is a practice that allows you to pay a lump sum that is typically less than the amount you owe to resolve your debt. Debt settlement is typically offered by third-party companies that claim to reduce your debt by negotiating a settlement with your creditor(s).

While paying off debt for less than you owe may sound great, debt settlement does come with risks. Your credit score may be impacted, making it harder for you to get loans or be offered reasonable rates.

Additionally, creditors are not required to settle your debt and may choose to take you to a court or turn your case over to a collection agency. Furthermore, these third-party companies will likely charge you a fee for debt settlement negotiations.

Debt Consolidation

Debt consolidation involves rolling several debts into one lump sum debt so that you’re making one monthly payment instead of many. Debt consolidation can lower your monthly payment, especially if you can secure a lower interest rate.

Debt consolidation often makes it easier to pay off your debt. For instance, people who own homes might take out a second mortgage at a lower interest rate and use those funds to pay off other outstanding debt. They are then left with one loan with a lower interest rate and one monthly payment.

Another option might be to open a balance transfer card and move all your credit card debt onto that one card so that you’re making one monthly payment instead of several. Just make sure you understand the terms and conditions and are not paying a higher interest rate on the new card.

Debt Management Plan

A more involved option for tackling complex debt situations is to enroll in a debt management plan.

A debt management plan is structured to allow you to make one monthly payment that covers all the debts included in the plan.

In other words, instead of making payments for every debt, you rearrange the debt in such a way that you make one monthly payment. This is like the debt consolidation described above but is more involved because you must enroll in a program, usually run by a nonprofit, that acts as the middleman between you and the various creditors.

If all creditors agree to the plan, you make one monthly payment to the debt management plan agency. This payment is then dispersed to the creditors in the plan over a specified timeline. Usually, this timeline is between 3 and 5 years.

Note: the various creditors must agree to the debt management plan, so ensure each lender is willing to participate in the program before enrolling in one. A credit counselor with a nonprofit agency can help you with setting this up.

Debt management plans are mainly designed for unsecured debts such as credit cards and medical debt and secured debts like mortgages and auto loans.

Aside from simplifying things by making only one monthly payment, debt management plans can further assist you by cutting your overall interest rate up to 40% in some cases.

As with anything, debt management plans come with pros and cons, so it’s important to make sure you fully understand the plan and the risks before enrolling in one.


If all else fails, bankruptcy is a last resort option to consider. Filing for bankruptcy helps you resolve your debts through the court system. There are two types of bankruptcy for individuals: Chapter 13 and Chapter 7.

Chapter 13 bankruptcy is for people who have a steady income and who own property. In this scenario, the court approves a repayment plan that generally pays off the debt in 3 to 5 years.

Chapter 7 bankruptcy, on the other hand, is for those who have no means to pay off their debt, and what they do have is not sufficient to pay off the debt within a 3-to-5-year timeframe. Often, what assets you do have will be liquidated except assets exempt by court order.

Exempt items may include work tools, cars, and basic household furnishings. If needed, your property can be sold by a court-appointed official to help recoup some of the debt.

While bankruptcy is an option, it should only be used as a last resort because the impacts of bankruptcy are long-term, and it will take years for you to recover.

Should I Utilize a Credit Counselor When I’m Behind on Bills?

There are many options out there. What works for you depends on the type of loan, the amount you owe, how long you have been defaulting, and how confident you are in your ability to negotiate with lenders and resolve your debt situation.

In many cases, it will be to your benefit to seek help negotiating your situation via a credit counselor. There are many free credit counseling options available through credit unions, non-profits, universities, and consumer protection agencies.

If you can get debt help for free or for a small fee, a credit counselor’s expertise is a great option to help you find the best solution for your situation.

However, if you must pay a hefty fee or the counselor is not upfront about their fees that is a red flag, and you should not pursue those options.

When you’re already struggling with debt, the last thing you want to do is add to it. You can find more resources regarding credit counseling here or at the National Foundation for Credit Counseling.

Related: How To Save Money Fast: 25+ Easy Tips You Need in 2023

Moral of the Story

Debt is a common hurdle for Americans to overcome. Life happens, and it can be easy to get behind on bills following an unexpected event.

While it can be tempting to ignore the situation when you get behind on bills, that is the worst thing you can do. It can be embarrassing to admit you’re struggling, but the sooner you meet the problem head-on, the better your outcome will be.

As soon as you know you’re going to struggle to make your payments, contact your lenders/creditors and try to work out a plan that you can handle. It’s also important not to ignore collection agencies and seek solutions no matter what stage of delinquency you’re in.

For those with complex debt situations or a history of delinquencies, a credit counselor may be a good option. They will help you create a debt management plan and guide you through all the available options. If all else fails, bankruptcy may be the last resort to help you get a fresh start.

No matter your debt situation, it is critical to begin dealing with your debt as soon as you can. Create a plan to deal with your debt, pay it off, and then avoid accruing more.