When you can’t pay your bills

  • Published
  • By Cindy Middleton
  • 17th Training Wing Judge Advocate Office
Recently we came close to a government shutdown and not receiving our paychecks for an unknown length of time. You should always be prepared for such an occurrence by knowing how to handle your bills and creditors when there is no paycheck coming in. This should apply to any situation where you find yourself short on funds, not just during a government shutdown crisis.

Lawful debts and obligations, such as rent and child support payments, remain due whether or not you have the money to pay them. Therefore, it is imperative that you take measures to prevent or mitigate the consequences of falling behind on your bills. The following do's and don'ts will help.

First, review your spending habits and upcoming bills. Knowing what bills you owe and what spending habits you can cut back on will help you come up with a plan of action.

Call your creditors to negotiate revised payments before you miss payments. Most creditors will negotiate with you about a revised payment schedule to avoid default. However, it will be easier to get them to work with you only if you notify the creditors before you miss payments.

Suspend any automatic payments deducted from your bank account so that your account will not become overdrawn. If you exceed your account balance and are assessed overdraft fees, call the financial institution and request that the charges be removed.

If you have a court-ordered obligation, such as child support or alimony, you are required to pay them. If you absolutely cannot pay your court-ordered obligations, notify the state agency and the other parent or ex-spouse to let them know your payment will be delayed. Failure to notify a state agency of your financial difficulties could result in an adverse court action against you for failing to comply with a court order.

Contact your government student loan agency to see if you are eligible for a deferment or forbearance of your payments, which allows you to temporarily stop making payments without interest accruing. The terms of deferment and forbearance depend upon the terms of the student loan and your payment history.

Don't borrow from payday lenders or credit cards. These types of loans have high interest rates and fees which will multiply any financial hardship you may otherwise have. If you truly need financial assistance, consider other resources such as the Air Force Aid Society or the Air Force Assistance Fund.

Should your credit report reflect a bad credit, you can contact the credit reporting companies, Experian, Transunion, and Equifax, to post a personal statement about the cause (i.e., a government shutdown that delayed or furloughed your pay check). As long as you are current on your debts with a good credit history, your credit will not be ruined and your security clearance will not be in jeopardy. However, if you have a bad credit history, you may face credibility problems with your creditors.

If you are current on your rent and car payments, it is not likely that you will be evicted or your car repossessed immediately. Usually, these processes do not occur until after several missed payments. Also be aware of the protections available under the Servicemembers Civil Relief Act. Again, it is important to contact your landlord and creditors before you start missing payments to advise them of your situation and see if they can work with you on a delayed or reduced payment plan.

If you need assistance with avoiding repossession, eviction, adverse court orders, or other consequences of failing to pay your debts, call the Legal Office to arrange to speak with an Air Force attorney. The attorney can advise you on a particular course of action and can draft documents on your behalf to your creditors.