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Negotiating Bill Payments: 5 Ways to Keep the Lights on When You're Broke

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There's been a great deal of debate regarding who to attribute the old adage, "Life is what happens while you're busy making other plans." One thing's for certain: It's the truth when it comes to your money.

We've all had those moments when "life" happens and we're strapped for cash from time to time. That jaw-dropping car repair bill, flu-ridden doctor's visit, or emergency call to the plumber can set us back financially. But real hardship comes when a person is unable to stay on top of paying their bills, month after month after month. It's a disconcerting problem that can lead to debt, bankruptcy, and ruined credit.

If you find yourself falling behind on utility, cable, insurance, or other bills, or if you've been late for some time, here are a few ways to get your budget back on track and salvage your finances:

1. Work out payment plans. Despite popular belief, the electric company isn't eager to flip the switch and see you sitting in the dark. Quoted in Forbes magazine, Ted Beck of the National Endowment for Financial Education says most lenders and service providers are willing to help customers in financial trouble. "Your bank or a credit card company has a strong incentive to try to work things out," Beck said.

Call your creditors and see how they can accommodate you temporarily. It's in their best interest to get paid in some way, so negotiate with them and ask if they can set up an installment plan for you. This may vary from person to person--if you're several months behind on your bill, see if you can stall payments in return for one large lump sum paid down the road. Or, if you can arrange to pay smaller amounts first, gradually increase the amount as your finances catch up.

2. Settle a debt with collectors. Don't be intimidated by the scare tactics of debt collectors. In the event your overdue bills are sent to collections, bill collectors may be willing to work something out, too. Since debt collectors are commission-driven, many will be willing to enter a settlement agreement with you, offering to forgive your debt for a percentage of what you owe. That means you might owe just a portion of your outstanding debt.

3. Freeze payments. Ask your creditors if they can freeze your monthly payments for a time. This will halt interest or late charges from snowballing, giving you more time to pay off your balance. If it's a credit card bill you're behind on, remember that freezing your payments may also mean you'll be unable to use your card until the balance is paid up, putting your spending on ice, as David Ning of MoneyNing would say.

4. Change billing cycles. Though the exact due dates of your monthly expenses may be committed to memory, they don't have to be set in stone. Ask your electric, gas, cable, or other service provider if you can temporarily move your bill's due date forward, allowing you more time to gather the funds you owe. It may be helpful to arrange the due dates of your bills for days and weeks of the month where you're certain to have the cash on hand.

5. Differentiate the haves and have-nots. Some of your "needs" may actually be "wants" that don't demand a monthly, reoccurring bill. If it's down to saving your budget from oblivion, see what services you can cancel--many of which you may not even notice when they're gone. Many premium cable stations, for example, can be removed from subscription plan since a good portion of the programming can be found online for free or at reduced prices.

Stick with one or more of these payment methods, stay patient, and be positive. Like repairing credit, it takes time. Many service providers and lenders also carry some form of automatic bill pay, too, so when (not if) your finances get back on track, you'll have enough funds to meet the monthly balance without the worry of paying it manually each month. You might even have a financial reserve at your disposal.

Paul Sisolak writes for, your source for the best mortgage rates, CD Rates, savings account rates, personal finance news and more.

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