Behind on Bills? What to Pay First, Using the CFPB's Tool

If you’re behind on bills and can’t pay them all, the order you pay them in matters. The Consumer Financial Protection Bureau (CFPB) has a free tool for exactly this, and its approach is simple: weigh what happens if each bill goes unpaid, then rank your bills from highest to lowest priority. The tool’s groups point to what to protect: a roof over your head with the utilities on, your job, required insurance and court-ordered payments, weighed alongside other loans and credit cards.

As the CFPB puts it: “Ultimately, you’re responsible for all your bills. If you can’t pay them all at once, think about the order you pay them in.”

The trap: paying whoever calls the most

When money is short, it’s tempting to pay the company that calls most often or sends the scariest letter. How hard a creditor chases tells you little about what happens if you don’t pay. The CFPB’s tool starts from consequences instead.

The CFPB’s priority groups

The CFPB’s “Prioritizing bills” tool asks you to weigh the risk of not paying certain bills right now, grouped like this.

Things you need to stay housed and keep utilities connected

• rent or mortgage, and property taxes if you own your home
• utilities: gas, electric, water and sewer

The CFPB’s tip: the costs of losing a place to live add up fast, and late mortgage payments or an eviction can make it harder to find a new place if you need one.

Things you need to keep or get a job

• transportation to get to work: a car payment, gas and insurance, or bus fare
• tools or a uniform for work
• childcare

Insurance you need to pay for

• car insurance, which the CFPB notes is required in most states
• health insurance
• home or renters insurance

Obligations you need to pay

• court-ordered obligations such as child support or fines
• other loans and credit cards

The CFPB’s tip here: consider any legal consequences of delaying payment, and remember that credit card companies may raise your interest rates if you pay more than 60 days late.

Turn the groups into a plan

1. List every bill and debt with the amount and due date. Gather bill statements, overdue notices and any letters that threaten eviction, repossession, default or a service shut-off.
2. Mark the essentials using the groups above.
3. Work out what you can pay this month after essentials like food.
4. Rank your bills from highest to lowest priority, the way the CFPB tool’s last page does.
5. Pay the top of the list first, and contact everyone else.

If you truly can’t cover the essentials

The CFPB describes one fallback strategy: rotating the bills you pay each month. It’s not ideal, but it can help keep you from losing your car or home, having a utility shut off, or falling into serious default on a loan.

Call your creditors before you miss a payment

The CFPB suggests calling creditors to tell them why you’ll miss a payment. You may be able to make short-term arrangements. And if you’re in good standing, they may be willing to forgive an occasional fee.

If you’re often late with one particular bill, the CFPB suggests negotiating a new due date that lines up better with when you receive income or benefits.

How lateness affects your credit

Timing matters. The CFPB says utility and credit card payments received within 30 days of their due dates typically don’t affect your credit report. After 60 days, your credit card company may raise the interest rate on your balance, which can make it take longer to pay off what you owe.

Not paying your credit card balance in full by the due date can also cost you your grace period, which means interest on the unpaid amount.

Watch out for autopay while you’re behind

If some bills are on autopay, check the dates. You can stop an automatic payment: the CFPB says to tell the company you’re taking away its permission, tell your bank, and give your bank a stop payment order at least three business days before the payment is scheduled. Banks commonly charge a fee for a stop payment order, and stopping a payment doesn’t cancel what you owe, so use it only as part of a plan.

Free help

The CFPB’s resource list includes:

• HUD’s Office of Housing Counseling: 800-569-4287, for housing and rent or mortgage problems.
• National Foundation for Credit Counseling: 800-388-2227.
• USA.gov/debt, to find a certified credit counselor.
• CFPB debt collection resources, including sample letters, at cfpb.gov/debt-collection.

Before you sign up for debt help

Free help is available through the counselors above, so take your time before paying anyone. Ask any company offering debt help what it charges, what it will do and what happens to your bills while it works. The CFPB points to USA.gov to find a certified credit counselor.

Once you’re back on track

Falling behind often starts with a bill that came out at the wrong time or a due date that got missed. Once things are stable, put every bill on one list with its due date and set a reminder before each one. A bill tracker such as Billo keeps your bills in one place and reminds you 3 days before each is due. Our guide to avoiding late fees covers the habits that keep you there.

This guide is general information, not personal financial advice. For help with your situation, contact a free credit or housing counselor.