When money runs low, which bills should you pay first?

By: | News Channel 7
Published: January 27, 2009

Unemployed workers in South Carolina has jumped to nearly 10%. The State Employment Security Commission released numbers for December today, the state's rate went from 8.4% in November to 9.5% in December.

That has many people unable to pay bills. The Wall Street Journal reports the number of accounts that credit card companies have had to write-off for non-payment is now nearly 7% ... up one third from a year ago... and its expected to hit 8% this year.

If you're struggling to pay bills, credit experts have some advice on which bills are truly priorities, which ones can wait if necessary, and what to do if you just can't make payments, in this Seven On Your Side Consumer Watch.

More people are having to stand in line for the unemployment checks. And more, like Dusty Burchfield, are struggling to pay bills. Said Burchfield, "I'm about to lose my house, so that's how hard it is."

It's down to choices: which bills can be paid, which bills must wait. Said Burchfield, "You've got to have food, you've got to have power. You just do what you can and try to save your house."

Compass of Carolina Credit Counselor Brent Bishop says families should prioritize the most critical bills, like food, utilities, medicines, homes, and transportation. Bishop explains, "I've got to have a place to live, I've got to have a way to try to find a job or get to my job."

If you can't make a mortgage, car loan, or credit card payment, ask the lender for more time. Pay secured credit debts before unsecured, so you don't lose your collateral. Said Bishop, "Certainly some of those unsecured credit, like that, may be a blow to the credit, but that may be the least of your worries over 'how am I going to feed my family this month?'"

Bishop says just because a debt collector is calling, doesn't mean you should necessarily pay that bill first. Said Bishop, "The money they just committed was the money they needed for the power bill or car payment or something like that."

If your credit becomes damaged, Bishop says you can submit a written statement to the credit bureaus for lenders to read, explaining why you missed some payments.

If you can avoid it, don't let your medical insurance slide. The cost of illness and injuries are a big reason many families go bankrupt.

Need help prioritizing your bills? Call the National Foundation of Credit Counseling, for a referral to a credit counselor at 1-800-338-2227.