Talk with your lender if you foresee trouble making payments

Talk with your lender if you foresee trouble making payments

It might have options to help you, whether it’s changing your due date or letting you skip payments for several months. You might even be able to negotiate a settlement.

Explain that you can’t make the payments, offer less than you owe, and see if it accepts. This isn’t likely to succeed unless you can convince your lender that you’re unable to pay, but it’s an option. Your credit will suffer if you settle, but at least you put the payments behind you.

Prioritize Your Payments

You might need to make difficult decisions about which loans to stop paying and which ones to keep current on. Conventional wisdom says to keep making payments on your home and auto loans, and to stop paying unsecured loans like personal loans and credit cards if you must. The rationale is that you really don’t want to get evicted or have your vehicle repossessed.

Damage to your credit is also problematic, but it doesn’t instantly disrupt your life in the same way. Make a list of your payments, and make a conscious choice about each one. Make your safety and health your priorities.

Federal Student Loans

You might have extra options available if you borrowed for higher education through government loan programs. Loans that are backed by the federal government have benefits that you can’t find elsewhere.


You can stop making payments temporarily if you qualify for a deferment, giving you time to get back on your feet. This is an option during periods of unemployment or other financial hardship for some borrowers.

Income-Based Repayment

You might be able to at least lower your monthly payments if you don’t qualify for a deferment. Income-driven repayment programs are designed to keep payments affordable. You’ll end up with an extremely low payment to ease the burden if your income is extremely low.

Federal student loan borrowers were automatically placed in an administrative forbearance as of due to the Covid-19 pandemic. This allowed you to temporarily stop making your monthly loan payments. The suspension of payments was set to expire on , then again to . You may still make payments if you choose to during this time, however.

Payday Loans

Payday loans are unique because of their extremely high costs. These loans can easily send you into a debt spiral, and the time will eventually come when you can’t make your payments.

Consolidating payday loans is one of your best options when you can’t pay them off or sell anything to drum up cash. Shift the debt to a less expensive lender. Even credit card balance transfers can save you money in this case and buy you time. Just be mindful of balance transfer fees, and don’t use the card for anything other than paying down the payday debt.

It might be possible to stop payment on the check to preserve funds for higher priority payments if you already wrote a check to a payday lender. But this can lead to legal troubles, and you’ll still owe the money. Speak with a local attorney or legal advisor who is familiar with the laws in your state before you stop payment. You’ll have to pay a modest fee to your bank even if it’s an option.

Credit Cards

Skipping payments on a credit card also requires special attention. Make at least the minimum payment, if possible, although more is always better. Your credit card issuer can raise your interest rate to a much higher penalty rate when you stop making payments. This may make you re-evaluate the priority of which payments to skip and which ones to pay.

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