OVERVIEW
For a variety of reasons, there are times when you can’t make the payments on your bills. What happens when I don’t pay my bills?

During the current economic crisis, it has become more and more common to hear of people who can’t pay their monthly bills. This may happen when one person in the family loses a job or gets a pay cut. It may happen when the interest rate on a variable mortgage payment rises and the payment is now higher, leaving less money for other bills. For a variety of reasons, there are times when you can’t make the payments on your bills. What happens when I don’t pay my bills?

When I Don’t Pay My Bills: Collection Notices. You will receive a notice or two from your creditors reminding you that your payment is late.
When I Don’t Pay My Bills: Collection Calls. Your creditors will begin to call you, hoping to remind you that a payment is past due. You can speak with them about your inability to pay at this point and hopefully negotiate a payment plan that you can meet.
When I Don’t Pay My Bills: Increased Interest Rates.If you haven’t paid your bills, or you have but they’ve been late, chances are that you will find yourself with an increased interest rate. This is especially true with revolving charge accounts, such as credit cards.
When I Don’t Pay My Bills: Negative Credit Rating. Your payment history is reported to credit agencies, such as Equifax, Experian and TransUnion. If your credit history reveals a failure to pay, or a history of late payment, this will negatively affect the credit rating that these three companies create for you. With these negatives influencing your credit rating, your credit score will fall and you will become a bad credit risk. It will be more difficult for you to borrow money in the future.
When I Don’t Pay My Bills: Legal Action. The credit card companies could initiate legal action against you if you continue to be deliquent with your payments or fail to make arrangements with them.
When I Don’t Pay My Bills: Bankruptcy. You could be forced to declare bankruptcy to satisfy your creditors. While this word has a negative connotation, bankruptcy doesn’t have to be a negative experience. Bankruptcy can help you wipe your financial slate clean and begin again. It will take time to reestablish credit, but you will begin your financial life anew, on solid ground.

When I Don’t Pay My Bills: How to Prioritize
When you find yourself in position of having to make choices about which bills to pay, how do you choose?
When I Don’t Pay My Bills: Health and Security. Your family’s health and security should be paramount, so it’s important to take care of meeting your mortgage and paying your health insurance. You’ll also need to take care of transportation, utilities and food.
When I Don’t Pay My Bills: What Will You Lose? If you will lose something by not paying a bill, you probably do not want to skip that payment. Look to unsecured bills, such as credit cards, as bills you might be able to skip.
When I Don’t Pay My Bills: Interest Rate. Which credit cards have a higher interest rate? You can sometimes buy yourself some time and save yourself some money by transferring balances from a high interest card to a lower interest card. You can often contact the credit card company and talk to them about lowering the interest rates or creating a payment plan with smaller payments.
When I Don’t Pay My Bills: Consolidation Loan. Consider a consolidation loan carefully. Be sure to understand the interest rates and fees associated with a consolidated loan.