What Should You Do if Your Spouse Can’t Pay His/Her Bills?
This can be a tough situation to work through just because finances are a touchy subject. You both might already be stressed out about finances and now you find out that your spouse has missed payments that you thought were current. Or worse, s/he has taken on some debt that you weren't aware of. So what to do next?
Look at All of Your Bills
Schedule a time soon where you sit down together and look at all of your expenses and bills. If any are unopened, start opening them to determine the status of the accounts. Figure out which bills you need to catch up on. It doesn't help to blame or argue at this point. Instead, focus on solving the problem, because you are in this together.
Determine a Plan
Once you have everything organized, get a plan in place. Start catching up on any past due accounts, keeping in mind that mortgage, utilities, car payments, should come first. Always focus on what you need to have a roof over your head and keeps you safe and healthy. If you determine that you don't have enough money to pay them all, it's a good idea to contact companies to see if you can work out an affordable repayment plan. Just don't agree to something that's not affordable.
If either one of you is still using credit cards at all, stop charging asap. Tacking on even more debt will only make it harder on yourselves. And if your spouse is struggling with this, be sure you are in charge of holding the cards...or better yet, cut them up. (You can always save one for things like reserving hotel rooms, etc.) This also means that neither one of you should open up any new credit accounts or take out any more loans.
Go Into Crisis Budgeting Mode
I've talked about this many times, but I can't stress enough how important it is to cut as many expenses as possible, specifically non-necessities. You need to spend less to stabilize your situation. If your spouse did the charging without you knowing, it would be a good idea for him/her to find ways to increase income to pay off the debt. And yes, it stinks to be forced to spend minimally and possibly work more to earn extra income. However, temporary pain to stabilize your situation faster will be worth it in the end for both of you.
Pay Off Debt
The decision you will need to make is how much you're willing to sacrifice if your spouse was the one that incurred the debt. You can choose to provide emotional support alone or you can choose to do the work with her/him. Again, determine what's most important. If your credit is also affected by missed payments, you may want to at a minimum help in getting caught up on bills; then your spouse can work to pay off the debts once everything is current.
One option to help pay off debt is a Debt Management Plan for your spouse or both of you if the debts are shared. A DMP helps pay off your debt faster and saves you money. To find out if a DMP is right for you or your spouse, GET STARTED ONLINE or call 888.577.2227 to schedule a free financial counseling session with LSS.
Check Your Credit Report
If you're worried about how your credit might be affected, check your credit report by visiting AnnualCreditReport.com. However, in the grand scheme of things your credit score really doesn't matter at this point. What matters is that you get back on track to prevent any further damage. The sooner you get accounts up to date and are making on time payments, the sooner your credit will improve.
Work on Prevention
This is just as important as getting your bills caught up. Figure out how this happened and how you can prevent it from happening. Do you need a better budgeting system, like maybe the envelope system? Do you need to open a joint checking account to make sure bills are getting paid? Determine what works best for the two of you so you can be on the same page and prevent another crisis.
Your spouse needs to make a commitment to no more charging and both of you need to commit to talking about issues that come up. It's a good idea to meet on a regular basis about your finances. For the first couple months, I suggest meeting once a week. Then cut back to every pay period and when you feel like everything is going well, meeting once a month should be enough. For more ideas, read A Couple's Guide to Money and Relationships.
SAVE, SAVE, SAVE
Even if you have a plan in place moving forward, that doesn't mean you're immune to a financial emergency. You never know when your car is going to break down or an unexpected expense pops up. So be sure to make room in your budget to pay yourself first each payday. Set aside money in an emergency fund and let it build up. Having that safety net in place is the best way to be prepared for a financial emergency.
Author Elaina Johannessen is a Program Director with LSS Financial Counseling.