How to Deal with Unpaid Bills

In the society that we live in, bill payments are part and parcel of being a citizen. Bill payments can include anything from utilities to credit cards to Wi-Fi and more. Paying these outstanding bills on time can have a strong bearing on your credit score, which then positively impacts your ability to take on future debt. Conversely, not paying bills on time hinders your credit score and handicaps your ability to take on debt in the future. Despite our best efforts though, sometimes bill payments can be missed or skipped accidentally. In this scenario, you have to try your best to remind yourself that it is not the end of the world. If you ever find yourself having to deal with unpaid bills, remember these tips below:

1. Organize bills by interest rate or penalty fees

As a first step, it is helpful to look at your outstanding bills and check which of them incurs the highest penalties or interest rates for non-payment. Sort your bills by descending order of severity with the highest interest rates first. Ultimately, this will help you manage your funds to ensure that you are not stuck in a debt cycle where you are paying off interest without paying down principal.

2. Organize bills by due date

The next step can be to sort the bills by due date with the most immediate ones coming first. This ensures that you are prioritizing your funds for the most urgent bill payments. Note that this does not necessarily mean paying off the upcoming bills first. That is where Tip 3 comes in.

3. Understand your financial position and determine priorities

Once you have sorted the bills by descending order of interest rates and penalties, and ascending order of date, you should have an idea of how much you owe and when it needs to be paid. You should also know how much money you have in the bank to service these bill payments. If you have enough to deal with all of them, that's great! Ensure that you keep track of the due dates (via calendars, diaries or whatever works for you) and pay the bills back on time. If not, then use your best judgment to determine critical needs (such as heating, water etc.) that you would be hardest hit by if you were to lose access to them, and pay them off first. Then, pay off high-interest bills first by order of due date (earliest first).

4. Inquire about grace periods

If you find that you may have a shortfall of funds to meet bill payments, ask vendors if they offer any grace periods. Some vendors often have a 15-day grace period from when the bill is due which can work to your advantage. It is important to stress here though that these grace periods are a privilege and should not be abused. Use them fairly to manage your finances.

5. Consolidate your payments (if possible)

Sometimes, unpaid bills are just a matter of people forgetting to pay them on time. The average person pays between 6-10 bills each month. With this volume, sometimes a bill payment can slip through the cracks. To this end, it is worth consolidating bills if possible. For example, if you have your phone bill coming from one company and your Wi-Fi bill coming from another, you can evaluate whether it would be feasible and economical to get both services from a single company. Beyond the manual effort that you save in paying 2 separate bills, you may also be able to yield some discounts on the consolidated service package.

6. Get a debt consolidation loan

A debt consolidation loan essentially functions as a single loan that you can get from a financial institution to pay off all your separate bills in one go. Thereafter, you pay back the debt consolidation loan as a normal loan. For example, if you have a credit card bill of $700, student loan repayments of $2,000 and utility bills of $300, you may take out a debt consolidation loan of $3,000 and pay off all three of the aforementioned bills immediately using the proceeds. After that, you pay back only the debt consolidation loan. This is often used by consumers as the interest rate on a debt consolidation loan is lower than the individual rates of the bills outstanding, so it helps you save on interest costs over time.