What to Do When You Can’t Pay Rent or Mortgage Payments

Lots of folks struggle to pay their rent or mortgage sometimes. Life happens, you know? Jobs are lost, hours get cut, cars break down, medical bills pile up. It’s enough to make anyone’s head spin!

If you find yourself unable to make a rent or mortgage payment, don’t panic. Take a deep breath. There are options and resources to help you get through this tough time.

Communicate with Your Landlord or Lender

The first thing you should do is reach out to your landlord or mortgage lender. Let them know you’re having trouble making your payment on time. Most understand that things happen. They would much rather work with you than go through the hassle of evicting you or foreclosing on your home.

See if you can set up a payment plan to pay back what you owe over time. Offer to pay a portion of the monthly rent or mortgage until you get back on your feet. Any amount helps take the pressure off. Just showing you want to pay what you can goes a long way.

Check if You Qualify for Assistance

Many states and local organizations offer rental and mortgage assistance programs. These can provide grants, low-interest loans, or other help for those struggling with housing costs.

To find programs near you:

• Contact your local housing authority
• Call 2-1-1 to speak with a community resource specialist
• Search online for “rental assistance [your city or state]”

Some of the main programs to look into include:

• Section 8 Housing Choice Vouchers – Helps pay a portion of low-income families’ rent
• Public Housing – Provides affordable rental homes for low-income families
• Emergency Rental Assistance – Short-term help paying rent and utilities
• Home Affordable Modification Program (HAMP) – Modifies mortgages to lower payments

Apply for Unemployment Benefits

If you lost your job or had your hours reduced, apply for unemployment benefits right away. This provides weekly payments to help cover basic expenses while you look for new work.

To qualify, you must have lost your job through no fault of your own. Benefits are available to W-2 employees, self-employed workers, freelancers, independent contractors, and part-time workers in most states.

You can apply through your state’s unemployment insurance program. The process is done online or over the phone. They will determine your eligibility and payment amount based on your prior wages.

Use Credit Cards Strategically

It can be tempting to rely on credit cards to pay the rent or mortgage when cash gets tight. This option requires caution – high interest rates can quickly create bigger issues.

If you do use credit, have a plan to pay off the balance ASAP. Try these tips:

• Make minimum payments on all cards except the one with the lowest balance – put as much money as possible toward paying that one off first
• Contact issuers to request lower interest rates or balance transfer offers
• Pay down balances with any extra income, tax refunds, etc. to get out of debt faster
• Consider consolidating balances to a lower rate personal loan

Borrow from Your Retirement Savings

Withdrawing funds from a 401(k) or IRA should also be a last resort. However, some employer plans allow you to borrow against your balance and pay it back over time.

This avoids penalties and taxes associated with early withdrawals. Just be sure to repay the loan promptly to avoid extra fees and interest.

Communicate with Other Creditors

If you need to direct more cash toward rent or mortgage payments, talk to your other creditors – utility companies, credit card issuers, auto lenders, etc.

Let them know your situation and see if they can offer some flexibility, such as:

• Temporarily lowered minimum payments
• Waived late fees
• Due date changes
• Lower interest rates

You may be able to free up some extra money to put toward housing costs.

Get Help from Local Charities

Check with charities, religious organizations, and nonprofit groups in your community. Many operate emergency assistance programs that help cover bills, rent, medical expenses and other critical needs.

For instance, The Salvation Army offers rental and utility assistance through local corps community centers. St. Vincent De Paul provides eviction prevention services like back-rent grants. Find help by searching “[your city] rent assistance programs.”

Find Ways to Supplement Your Income

Look for ways to earn extra cash that you can put toward rent or mortgage payments, such as:

• Getting a part-time job – check local retail and restaurant openings
• Driving for a rideshare service like Uber or Lyft
• Selling unused items on Craigslist, Facebook Marketplace or eBay
• Doing freelance work like writing, web design, tutoring, etc.

Every little bit helps chip away at what you owe.

Negotiate a Payment Plan with Your Landlord

If you just need some extra time to pay rent you owe, ask your landlord to set up a payment plan. Offer to pay a portion now plus a little extra each month until it’s paid off. Make this as affordable as possible so you can stick to it.

Having an agreed-upon written payment plan can help avoid eviction. Just be sure to follow through on the payments.

Prioritize Rent or Mortgage Payments

Housing payments should take top priority over any other debts or expenses. Try cutting back on discretionary spending and directing that money toward rent or mortgage instead.

Food, utilities, transportation and other basic needs come next. Credit cards, retail purchases and other discretionary expenses are lowest priority.

Borrow from Friends or Family

As a last resort, borrow from friends or family members to cover housing costs in the short term. Be sure to outline a repayment plan – don’t let it become an open-ended loan.

Offer to sign a promissory note agreeing to repay the money by a certain date. This protects relationships and shows you intend to pay it back.

Explore Alternate Housing Options

If you simply can’t afford your current rent or mortgage, it may be time to consider cheaper alternatives, like:

• Getting a roommate to split costs
• Renting a room in someone else’s house
• Moving in with family temporarily
• Subletting your place and renting something cheaper
• Negotiating a lower rent with your landlord

This takes planning, but could significantly lower housing expenses.

Know Your Rights and Responsibilities

Before withholding or making late rent or mortgage payments, understand the potential consequences and your rights as a tenant or homeowner.

Not paying rent could lead to eviction, late fees, and damage to your credit. Not paying a mortgage typically results in foreclosure.

However, there are laws that protect consumers if discussions are happening in good faith to remedy nonpayment. Learn about grace periods, proper notices, and protections in your state.

Get Free Legal Assistance

Housing attorneys can advise you for free or low cost if you’re facing eviction or foreclosure. Try these resources:

• Your state bar association
• Legal aid organizations
• Law school clinics
• Court’s self-help center

They can ensure your rights are protected throughout the process.

Declare Bankruptcy as a Last Resort

If you have no other options and your financial situation is truly dire, bankruptcy may provide relief. This discharges certain debts so collectors must stop collection efforts.

Chapter 7 bankruptcy completely liquidates assets to pay debts, while Chapter 13 restructures debts into a court-mandated payment plan. Each has pros and cons.

This is a complex process best navigated with an attorney’s help. Be sure to exhaust all other options first.