Ep. 29 If You’re Behind on Bills, Watch This First (Most People Do This Wrong)

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If you’re behind on bills, dealing with late payments, or getting calls from collections, this episode is for you.

Opening a late notice or answering a collections call can feel overwhelming, and personal. But falling behind doesn’t mean you’re irresponsible, broken, or bad with money. It means life happened. And the good news? This is fixable.

In this episode of the Net Wealth Nest Podcast, Jim breaks down exactly what to do when you’re behind on bills or facing collections, without shame or fear. You’ll learn how to stop the financial bleeding, prioritize the right bills, communicate with creditors, negotiate collections safely, and avoid common scams that target people under stress.

This is a calm, step-by-step roadmap for anyone trying to get back on track and rebuild financial stability; especially if you’re living paycheck to paycheck.

In this episode, you’ll learn:

What to do first when bills are late or piling up

The difference between late payments, charge-offs, and collections

Which bills to prioritize to protect your stability

How (and when) to contact creditors before things escalate

How to negotiate collections without getting scammed

Why paying collections doesn’t instantly fix your credit (and what actually does)

How to prevent this from happening again with simple systems

If you’re stressed, embarrassed, or frozen by fear around money, you are not alone. Progress starts with one clear step, and this episode helps you take it.

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Transcript

Jim 0:00

Have you ever opened your mailbox or checked your email, felt your stomach drop a late notice, a missed payment, maybe two, maybe three, and at that moment it's not just about money anymore. It feels like you've failed, like you're behind, like you're irresponsible, like you're the only person who just can't figure it out and can't get it together. Let me tell you this right up front, you are not broken and you are definitely not alone. Late payments happen for all types of reasons. Could be a job change, unexpected bills, medical stuff, life hitting all at once. And sometimes it's just that the budget didn't meet the reality. But here's the good news, it's fixable, and today we're gonna talk about exactly what to do when you're behind, how you catch up, how you stop the bleeding, and how you build a plan that works in real life. No shame, no judgment, just simple steps. Let's get into it. Step one, let's stop the bleeding. This is not the time to panic. This is the time to pause and assess and start to build out your plan. Here's what you can do. Make a list. Who do you owe? How much do you owe? And how late is it? 30, 60, more than 90 days late. Then look at how are you prioritizing these debts? Are your needs coming first? Things like your housing, your utilities, transportation, food, Those items should be your first priority, and then you can start to attacking anything else behind that. But you wanna maintain your needs for stability in your life and those needs. Are critical for you to survive on a daily basis and then know what the difference is between maybe the, the notices that you're getting A late payment, not great, but easily fixable. Maybe it's something you could catch up immediately. especially if it's in this first 30 or 60 days. Like that might just be doing a couple extra payments over the next 30 days. Charged off, definitely not good and something you definitely wanna avoid. But if it happens, what it means is the lender, whoever it is, whether it be a credit card company, whether it be a bank, whatever, they have determined you are not going to pay this, or they just don't believe that you're going to pay it. And they've charged it off, meaning they've gone into their accounting and said, Hey, we're not gonna get this money back from this individual, does not mean that you don't owe it anymore. Common misconception. Many people think if it gets charged off, oh, they charge it off. They've erased the debt. I don't have to pay anymore. No, no, no, no, no. That is not the case. What the lender is saying is, we don't expect to get any money from this, and if we do, great, it's bonus, but we're gonna write it off on our business and we're gonna pretend like it's a loss for us. And so that has a larger negative impact on your credit because that will get filed against your credit. So will late payments, they do make a ding. But getting a charged off is the next step towards collections, and it is a significant ding to your credit. and then the last one is when it goes into collections. Now that doesn't always mean that the debt has been sold off. It could or it could mean that the lender has hired a company to go collect it. Either way, it's going to mean that you are going to get emails, probably mail, and definitely phone calls from someone trying to collect that debt. Sometimes on a daily basis, that company's goal, that's either been hired or has bought that debt. At that point, their only goal is to get. Any money they came from you to recover the debt that is owed. This clarity will help you understand and lower some stress on like where you are in the process and what the steps are to take, depending on what point in the process you are, there are different things you can do and so just understanding that will help you work through the situation that you're in. So the next step is to contact the creditor this could be before or after collections. Let's start off with the before. If you're late, but not collections, call it before it escalates. Ask about any options they might have for hardship. Maybe you're just struggling to make ends meet right now, and paying that credit card bill has been a, a big struggle for you and it continues to go late. Ask them about hardship programs, temporary forbearance, fee waivers, any of that type of stuff. Telling them, Hey, I wanna make this right, but I'm experiencing a temporary hardship and wanna discuss some options, is the first step to opening that door and having a conversation with whoever that lender is on what options might be there. Now that being said, not everybody will give you options, but it's worth the phone call and it's worth asking questions, especially if you're struggling. If you just forgot to make a payment and it's late, or you forgot about that bill, or whatever it is for the last couple of months, and you have the capability to catch it up. Do that. That will help you build back your credit much quicker than trying to go through some other options or trying to delay if you have the cash or the capability to pay back any late payments before they go to being either charged off or even worse collections. Get that bill caught up. If it's already in collections, this might be a little bit controversial, but that I recommend you do not. Ignore the phone calls, but the key is you can't panic answer and you have to be ready to remain calm and control your emotions when those phone calls happen. You also need to get everything in writing. The unfortunate thing about some collection companies is they can be shady. They can say or do things to try to force to get money. Again, remember, as a collection company, whether it's been hired by the company that still owns the debt that you originally have to try to collect, or whether they've gone ahead and bought it from the old lender and now they own it, their entire goal is to get an extract. Any money out of you that they possibly can and as much as they possibly can, as quickly as they possibly can. So they will say and do things that are just straight up shady, and you need to be aware of that, and you need to make sure that you are not being pressured by them to do something that you can't actually execute, or even worse, that you shouldn't execute. You should also ask some really specific questions of who owns the debt. Is it the lender that you originally lended from, whether it's the credit card company, a bank, any of that, or have they bought the debt? Are they offering a settlement offer where if you pay like a lump sum, they will go away and they will just erase the debt, call it good and remove it, from any negative, continued negative marks to your credit report. And then will that payment update be reflected on your credit report? Just because you pay it, some companies don't take the time to go reflect on your credit report, which is not helpful. You want it reflected that it's been caught up and that will help you build back your credit. again, as you're getting these answers, you should be taking notes, and then you should also ask for everything in writing, whether that be a certified letter in the mail or whether it be an email, You should do that. Now there's a couple things around negotiating with, collection companies if you are in that point, it's an important mindset shift where most people feel pressured and they feel, backed into a corner, but you actually have more leverage than you think, and almost all collections are negotiable. Couple of keys, when you're talking about negotiating, what the payment fee structure, a lump payoff, whatever it might be, is. Never give any of your bank info over the phone, ever. And then always start low. Especially with old debt, they will be more likely to settle because they would rather get something than nothing. And so if you have some really old collections that have just been crushing your credit for, you know, six months, a year, any of that, maybe sometimes longer. Negotiating a low payment. Is more likely because they just want to collect something on this debt at this point. you can ask for a lump sum payment, which means let's say you owed a thousand dollars and they're willing to settle, for 200. you can ask for just, I just want to do a one payment. I don't wanna do payment plan. Like, what, what's the amount that we could do for that? And you would have to throw out some numbers. They will probably throw out some numbers. Again, Reminder of starting low. If you let them start, they're always gonna start high. We want our thousand dollars. Well, we could do 900. Okay. How about 50 bucks? And just see where it goes. there's no harm in throwing out an extremely low offer because maybe they'll take that $50 and just say, fine, we'll do 50 bucks. Thank you. Great. Okay. Again, not always will that happen, but it's worth just putting it out there. You also, if you start a repayment plan, you don't wanna restart any type of clock on it. So for example, if, you had something that had maybe an interest rate of X amount over 12 months, you just want to make the payment where, you know, That it will be paid off in X time. And so we're talking dollar amounts. We don't wanna be talking like interest rates or any of that. We wanna say you owe a thousand. Hey, they're willing to settle for a hundred dollars monthly payments in five installments. So once a month for five months, that's it. We're over. We're done. We don't ever wanna restart a clock or restart any payment plans or any of that type of stuff. And then the one thing is never agree to anything without written confirmation. So if you guys, if you're like, Hey, I could do $50, or I could do $200 on that thousand, great. We will, we accept $200. Okay? The, your next step is I need you to send all of this information to me in writing, whether it's in the mail, whether it's in email, whatever. And you just send all this information to me in writing. I need it documented. who you are, where you bought the debt from, what it looks like, what we have, just talked about. And then, I will agree and set up a payment, to do that, but I need to know all of the details we have talked about, and I need it all in writing. I need you to say that you will reflect this on my credit report as well. Again, everything you've talked about, you're not agreeing, you're saying This works for me, but I need it all in writing before I agree to actually do this easy way to make sure that they, they are, legitimate and are willing to do that. And then red flag phrases that you will hear from collectors, this offer expires today. You have to do it today, or, we're not gonna do that. We'll sue you immediately. Just trust me. If you hear anything like those types of phrases, it one of two things is happening, it could be a scam and we'll talk about that in just a second. Or they could just be pressuring you to try to get an answer without providing written documentation. Just walk away, just say, no, I'm not going to do that. that is if you need to execute something differently the way you wanna do it, that's fine. But every, like, that's not what we're going to do here today, and I'm not going to just blindly pay somebody. Now sidestepping that, the unfortunate thing with collections is it opens you up to more scam calls. There are already people out there that are just making random calls or trying to find out any public information about somebody who owes something on anything, right? And they are calling those individuals and trying to say, Hey, this has gone to collections. The easiest way to avoid and know it's a scam. Don't ever have anything, go late and don't ever have anything in collections. It's really simple. If somebody would ever call me, I don't have any of that. They would say, Hey, I'm doing this. Like I don't have that. That is not a debt of mine. So you're either trying to scam me or you're called the wrong person. Please don't call me again and hang up. It's as simple as that, right? But if you're in collections and you're starting to get this, calls you're just, you're more likely to be become a victim of a scam. So that's why it's really important, again, to verify the company. Ask who they are, ask who owns the debt. you can even call the previous lender and say, Hey, I've been called by X collections company. They say that they have bought this debt that I did not pay. You can you verify the information. And most companies will keep records of that because they need to for their tax purposes and all of that where they will be able to verify the company they sold it to. What the debt amount was, all of those steps for you so you can verify. Again, the reason you want documentation is so you can verify all the facts of those companies and make sure that you're not giving money to some random person or a scam. the other thing with scams to keep in mind is. You are in a vulnerable situation. You might have high emotions based on what's happening in your life around, your late payments or your collections. when people are in those moments, they're usually stressed out. And when they're targeted scammers know what buttons to push to try to get people to make rash decisions, without thinking through it. And so things like, you know. People saying, well, if you pay it now, I can erase this all off your credit, and it'll be like, it never happened. Or, if they're asking for, upfront fees, on top of whatever debt you owe to, repair your credit and do any of that, like, those are all the. Really things that like, you should just understand, it's probably a red flag and it's more likely than not a scammer. There are fake debt collectors out there, unfortunately. It's just part of the world we live in. And so understanding that there should be no extra upfront fees if you're working with a, collections agency to pay off debt. There should be, there's no guarantees around your credit or any of that. if they're legitimate, they control putting in data, they do not control, like making the decisions to, increase your credit score or any of that. the bottom line becomes, if it feels like a shortcut, it's usually some sort of trap. even with legitimate debt collection companies, if it feels like they're pushing you into the shortcut to make everything easy, they're usually getting more than what you probably need in your situation. So just be careful. Remember, if it's gone to collections. Nothing is so imminent that it needs to be done in the next five minutes or it's going to make the situation worse. you always have time to, to ask questions, figure it out, get stuff in writing and verify, in a legitimate situation before executing any type of plan. And then again, kind of to piggyback on that, about how your credit report works. Paying off a collection, paying a late debt payment. any of that, it's not an instant fix to your credit report. It is incredibly helpful and over time as you make other payments on time, it will make it easier for your credit score to go up faster, but it does not instantly erase anything. It does not instantly fix anything. Okay. And that's where you've just gotta be really aware of what they're telling you they can do, knowing what can be done. And the key is your payment history improves forward, not backwards. Whatever has been reported, unless it was incorrect, information from that lender typically is not gonna be able to be erased. So if you have late payments that were actually late, if you have charged off accounts that actually got charged off. Or if you have a, debt that is actually gone to collections, you're typically not gonna be able to erase that. What you are able to do with, again, legitimate agencies or lenders that report is you are able to show that you caught up on those payments and that debt has been. Taken care of or is on time now and you're making payments going forward on either that debt or if it's gone, other debts you might have, and that's how you build back your credit report. Okay, so let's say you've figured some of this stuff out. You've gotten caught up, but how do you stay that way? Of course, the first thing we always talk about is. Go with your budget. Make sure your budget is accurate. Make sure it's updated with all your current expenses, especially your needs. Look at where your money's going with your wants and some of your savings or investment. Make sure you're tracking it. Just because you build a budget doesn't mean you're sticking to it. You need some way to track it, whether it's old school, pen and paper, or Excel spreadsheet. Or you want to use the multitude of apps that are out there. Again, things like Rocket Money and you need a budget, or Monarch money. Those are all great programs to help you track the dollars that are going in and out of your accounts and actually understand what your budget looks like. The next thing you can do is set up auto payments so you don't go late on things you know you shouldn't, and you know you'll have money for things like your rent or your mortgage, your utility bills, car payments, insurance payments, any of these things that you could set automatic. Withdrawals from your account, will help you ensure that you don't accidentally forget about making a payment and it just gets pulled from your account every single month, like clockwork. Make sure you build your emergency fund again. That first thousand dollars is so important to get to just in case you have, some random, emergency come up, whether it's a medical bill, whether it's tires for your car, whatever it might be, you have that. To reduce future risk, have fewer and open fewer accounts. So one thing I do see is people who have a lot of different accounts and are moving money around, they miss their payments. And the reason is it's just hard to track all the different moves ins and moves out that are happening. And so if you could stay away from that. Do that focus on, just singular programs that, you know, if you have, one operating account that has, all of your needs payments coming out, your mortgage or your rent, your food, your transportation, your insurance, your utilities, all those are automatically coming out of one account, not three or four. Same with like your savings. You have a savings account that you're doing for that. If you need extra savings account, 'cause you're saving for something extra off the side, great. But you should have one emergency fund account. Like all those things don't introduce complexity into your life and your financial picture, especially when you're trying to get it figured out and you're trying to build on. It. The easier it is, the more consistent you'll be. And remember, we're not about being perfect and not spending any penny on anything. That's not a need. It's about consistency. It's about knowing where your money is going. It's about knowing how to control that and where to make adjustments when it is necessary. Again, I'll kind of go back to what I said at the beginning of this. People miss payments. People go late. People have things charge off, and people go to collections. You are not alone, and it doesn't mean you're a failure. You just need a little bit of help to round out some of the areas that maybe are a miss in your life. But this all can be done and hundreds of thousands of people work to figure it out every single day. You can be one of those individuals. And then the other piece is you don't need to fix everything in one day. Plan it out, figure it out. Do your research when it's necessary, especially if you're in collections, making sure you're not getting scammed. if you're in this situation where you have late payments, late bills, you have things in collections, I just encourage you, like, write it all out. Write it all down. Make a call. Make one call tomorrow on one debt that you are gonna work on, and help yourself, move in the right direction. I hope this is helpful for you. If it is, please make sure you're subscribed to our YouTube channel or that you are, Subscribe to us on your podcast, player of Choice, whether it's Apple or Spotify, whatever you've got. make sure you're sharing this with friends and family. There are so many people out there that don't want to talk about their financial picture because they're embarrassed or they feel shamed because they've, you know, been late on stuff or whatever they've had to ask. People for money or any of that. The whole point of net wealth nest is to help people break outta that paycheck to paycheck cycle. And we really, need your help in doing that. And by sharing this information out there, you can help other people, deliver their financial picture for their future. Thanks again for joining. I hope this is helpful. I hope you are working towards getting outta that paycheck to paycheck cycle if that's where you're at, and of course, building your net wealth nest. My name's Jim. Bye everybody.