HE-245
1986
When Your Income
Drops 6
When you rank your bills in order of priority, chances are shelter and utilities top the list. Perhaps not as immediate, but still just as important is the issue of what to do about health insurance.
Mortgage payments
House payments can eat up as much as 30 to 40 percent of the family budget. What does a family do if a job is lost and the income stops?
The first step is to contact the creditor. Explain the situation and make an appointment to try to work out an alternative payment schedule. Bring a net worth statement, see publication HE-242, a projection of income and expenses, and a plan for continuing to meet at least part of the payments to show your family’s financial situation.

You may be able to extend the term of the mortgage or make an arrangement of temporary payments of interest only.

It is important to realize that when you’re in financial difficulty and you don’t relish talking to anyone, you must not ignore financial obligations, particularly mortgage payments. Remember, most creditors want to work with you. Creditors generally prefer to work out a way for you to succeed in keeping that house, particularly in a time of slow housing sales.

Consider alternative ways to cover mortgage payments. Could you rent a spare room or share the house and the mortgage payments with others? Assess your housing options realistically. In some cases, your mortgage payment may be lower than rent.
Housing
and
health
insurance
If you rent your home or apartment, be familiar with the terms of your lease. Does your lease include a “late clause” that would allow you five to ten extra days to pay overdue rent? If you do not have a written lease, ask your landlord for more time to pay. Check your lease for a statement about “late charges.” If you do not have a lease or other advance agreements to add “late charges,” none can be billed to you.
If you do not pay your rent, Indiana law allows your landlord to evict you “peacefully” without a court order. If you are threatened or if you resist, the landlord must go to court. If you lose in court, you will receive an eviction notice allowing you 48 hours to move off the premises.
Utilities
Monthly utility bills may include charges for gas, oil, electricity, telephone service, and water. The customer has the full billing period (less processing time) to pay. Typically, if the bill is not paid by the billing date of the next month, a 3 percent late penalty is assessed on the amount outstanding. For bills 30 days past due, a notice is issued that utility
services will be disconnected immediately if payment is not made.

Utility commissioners stress, “If you are having trouble meeting payments, get in touch with your local utility.” The utility company will work with you on a payment schedule. You, as a customer, will then be asked to sign a “pay agreement” laying out the manner in which you will meet your obligations.

In general, utilities are high-priority bills. Before service will be reconnected; however, either the bill must be paid in full or a pay agreement reached. Finally, when service is reconnected, an additional $10 reconnection fee is charged.

Charges for local phone service are billed one month in advance.
Long distance charges are billed from the previous bill date through the day before the current bill date. If you cannot pay by the due date, contact the service representative to work out alternative payment arrangements.

Check your phone service for the amount of late charges applied to bills paid after the due date. The phone company may charge or increase deposits for consumers who often pay late. If payment is not made, phone service is cut off and you will have to pay all delinquent bills as well as a service charge for reconnecting the phone. (An advance payment or deposit may be required.) In addition, you will have to repair a damaged credit rating.
Medical insurance
If you lose your job due to a layoff or plant shutdown, an important concern is to maintain health and hospitalization insurance
Cooperative Extension Service • Purdue University • West Lafayette, Indiana 47907