What Happens When You Are Late Paying Bills?

My advice to you is to first make sure that you both take out term life insurance policies. If the unthinkable were to happen, the LAST thing you need to add to your burdens is the possibility of being homeless or bankrupt.

Make sure that your life insurance policy covers the balance on your mortgage and any other debt you have, plus at least 1 year's salary.

I have been late on paying all types of bills, but, at the advice of my attorney who did our first mortgage closing for us, never never never be late on your mortgage. Especially in this current tumultous financial environment where having ANY credit is no longer assured, I would be very diligent about not letting ANYTHING lapse. Seriously, I really hope that you have life insurance, and if not, get some ASAP.

*ETA* When my first baby was born, it was a month early & an emergency c-section, and then he was hospitalized for 2 weeks. I did pay several things late, but just called and explained and each company forgave the late fees/penalty, as long as I was on time for the next 2 payments.

If something catastophic happens (death in the family, job loss, etc.) you CALL.

Creditors will (usually) put all your bills on hold for 1-3 months, and then just prorate out those 3mo of bills over the next 6 months. For deaths in the family, many will want a death certificate mailed to them, while many others will just take your word for it.

PLANNING WISE: Designate someone in your family (or your attorney) in your will to have limited power of attorney. Create a list of all your bills NOW (and update as often as possible) with contact information so that the person who will be handling those items for you will have it as easy as possible.

If you miss any, you can just phone later when your head is on straight and get things adjusted. BUT if you do things ahead of time (aka call before you're late), it won't affect your credit or run you the risk of losing your home.

We are currently four months back on Power......making small payments, so they do not cut us off. Not sure how long that will last. We had a water tank issue this summer which was causing our heating bill to sky rocket.......we have not been able to get back on top.

Our car payment is always a week and a half late....The bank is just happy they get the payment.

We get hit with late fees and extra charges....But we refuse to do payday loans to get on top.

We are waiting to get out Tax returns. we use that sadly to get caught up to date on bills.

I have no credit. It was shot a long time ago.

I know it will not be like this forever. At least that is what I keep my hopes on.

What happens for now.....I get like 25 reminder phone calls a day. To the point I do not answer my phone.

At first it was scary. now it is just how things are.

Late fees generally apply and then they will cut stuff off when it gets over a month. Some companies will let you slide awhile on partial payments if you just call them and set it up (sometimes they need a scheduled instant payment)

With the IRS unpaid debts are serious business, they will harass you add late fees near the amount of the debt and them they can garnish your wages or put a levy on your bank account (a levy means they just take it whenever they want) If you are married and its your spouses debt they will take it from you directly(even if your spouse is neither a cosigner or using the account)

With property taxes the late fee is incredibly unfair and the payment plans are a joke. They cant levy you, but the can put a lein on your house. (a lein is not as bad as a levy, it means upon the sale of thehouse they will be paid out of the balance)If unpaid they can take your house by offering it up to bidders to sell your house for the taxes owed on it.

Im not really sure about mortgage payments, luckily ive never had one.

Once you are late more than 30 days, your credit will start taking a hit. You'll get late fees on everything, unless you can convince the company to waive them due to the circumstances. You'd have to be pretty late on your house for the mortgage company to start foreclosing, but they will eventually. I know that losing someone is a difficult situation, but ruining your credit on top of that will make it that much worse. I'd suggest keeping some sort of spreadsheet updated with what is due and when and even consider setting up automatic bill payment. Hopefully you'll never have to use it for that situation, but it could come in handy.

P.S.

It all depends upon the situation and who your creditor is. Why don't you have things set up automatically? Our mortgage, cable, gas, electric, etc. are all debited monthly from our account so we don't have to worry about things being late.

In regards to a home? It should take them up to 6 months before they start foreclosure proceedings. But some can be faster.

Credit cards? 30 days? They MAY note it on your credit report but if you call and tell them you have had a death in the family - they will usually waive it. You might have to pay a late fee.

Cars? It's been 13 years since I've had a car payment. When I lived in Belgium during Desert Storm? our payments were taking months to get stateside - don't ask us why - couldn't tell you - I had GMAC calling me at 0300 telling me my account was past due and they were going to repo it. I told them to hop on the boat and come get it...LOL...any way - after they figured out we were overseas, we got it set up and paid off...what a pain in the rear!!!

The first thing that would happen is you would be charged a late fee. Then the late payment would be reported to the credit agencies and your credit score would drop dramatically.

As far as a car repo or a foreclosure, that would depend, on who the creditor was and how you responded to their requests for payment. In general 3 or 4 months.

If you've always paid your bills on time and happen to miss just one payment, it's really not that big of a deal. You could probably contact the company and have the late payment fee waived, but you'd still have to pay the interest.

If this is a concern for you, then why not set up your bills to be paid automatically?

If you are just a little late they smile, charge you a crazy late fee and let it go. Generally in the case of death of a close family member you can call them and they will refund the fees.

It actually takes quite a bit before they repo stuff.

I am not sure what happens with interest rates anymore because of the changes in regulations.

Pretty much it is expensive to be late on bills so I keep all of mine on autopay and I have direct deposit so everything goes on regardless of what I am doing. :)

While it is good that you are planning for the future, one thing to remember... in the event of a death or any drastic thing, don't make huge decisions for at least a year. Give your mind time to clear and make decisions based on facts not emotions.

It sounds like you went through a very difficult time and I am sorry anyong has to go through loss. It hurts, it is difficult, but we must maintain our responsibilities.

Secondly, I've never paid a credit card late but in this day an time, I don't think there is anything such as a grace period.

With all bills, you would rack up late fees which grow and your credit will be ruined.

The best thing is to libe beneath your means and debt free so that the only "bills" you have coming in are those expected utilities which you should be able to manage.

I can't imagine a stack of bills and stress related to that. We choose to live so that we don't have that stress in our life.

It sounds like you are worrying about something for nothing here. If you feel like you can't handle the paperwork, etc... You should discuss the actions with your financial advisor and set up a point person to help you when this time eventually comes. The last thing you want to do is be so focused on a funeral that you lose your house, car livlihood, and everything and then make a difficult situation with your children even worse be having to uproot them because you ignored bills.

We run our own company from home and we have terms on the invoices I process. If someone does not pay within the terms, I start charging late fees which can be upwards of $300 a month ( I am talking about invoices that are thousands of dollars, not a small $400 bill or so) and when that invoice is paid, they are put on a cash in advance wired into a special account of ours or we don't sell to them. It is the price a couple of companies have paid because they decided to pay us late. Word of mouth travels like wildfire in our industry regarding companies who don't pay on time. Slow and non-payment of invoices have put some companies completely out of business because they are automatically on a cash in advance system with so many people. It can work like this with everyday people as well.......... your credit.

Here's something you could do to make you feel a little better. My mom did this just in case she made a mistake. Work out with your credit card you use every month to draft your bank account for the minimum payment. Have it drafted before the due date. This way, you don't get hit with the myriad of punishments that credit card companies hit you for. If you pay late, you'll pay a late fee (I forgot what the new rules allow). You'll pay interest too. And they can up your interest rates from a lower rate to a higher rate.

What my mom does is go down to the bank and pay her bill. She knows how much the minimum is that got paid, and just pays the balance. But she sleeps easy at night knowing that at the most, she'd just owe a little extra interest if she misses the payment.

If you pay a mortgage, it is the BEST thing in the world to have it directly paid out of your bank account. Missing a mortgage payment really upsets the apple cart and hurts your credit. You can also have some of your utilities drafted monthly - I do that with my electrical. I'm sure you can do it with your car payment too.

Of course, you have to have the monthly deposit of your paycheck in there to cover what goes out of your bank account. We always had our paychecks direct-deposited. If you end up in the hospital, that kind of thing, direct-deposit will help. Also, you can work it out to move money from savings to checking, rather than bouncing these direct payments, in case you die and your paycheck stops.

Let's hope there are no deaths, and no hospitalizations! :) But there's nothing wrong with having back-up systems to help you with these matters, just in case of the unexpected.

Oh - adding to QueenoftheCastle- enough life insurance to insure you can keep your home is so important. But don't fall for insurance they sell to cover your mortgage. That's too expensive! A cheaper term policy is what you should get instead.

Dawn