How to Get Back on Track After Missing Debt Payments

Life happens, and sometimes financial plans go off course. Falling behind on debt payments is a detour, not a permanent situation. Every financial challenge is an opportunity to learn new skills and create positive momentum. You have the power to turn things around, and every step you take could put you closer to a better financial future.

This moment is your financial reset button. You can get caught up and make your accounts current again. There’s a solution for every debt problem. Let’s discuss ways to get back on track after missing debt payments.

Steps to Get Back on Track After Missing Debt Payments

Past-due payments don’t have to keep you from thriving financially—you can recover. Ready to take action? Here's how to start getting back on track after missing debt payments:

Review your expenses and overdue payments  

As a first step, outline your monthly income and expenses. 

List each expense. It’s easier if you usually use debit or credit cards because you can review a few recent statements for each account. If you usually pay cash, list your expenses as well as you can, and start keeping a journal right away. Write down every transaction, no matter how small. 

Also, list all of your debt payments, including the required payment amount, the due date, and whether it’s current or late. Subtract your expenses and debt payments from your monthly income to determine how much money you could put toward catch-up payments. 

For late debt payments, note the total amount that you need to pay to bring the account current. 

Look for ways to reduce your expenses

Look for opportunities to trim your spending to free up money for debt payments. 

Are there any expenses that you could cancel or pause, such as subscriptions or memberships? Could you give yourself a modest grocery budget for a month and avoid eating in restaurants? Could you do a spending freeze? 

Another way you may be able to reduce expenses is by negotiating with service providers. Call up your home internet and cell phone providers to ask if there’s a better pricing plan available. 

Most people have to make sacrifices and change their spending habits to get out of debt. But those sacrifices don’t have to be forever.

Increase your income

You may be able to catch up on payments sooner by increasing your income so you can put extra money toward your overdue debts. 

Here are some ideas to boost your earnings:  

• Get a part-time job

• Ask for a raise or more hours

• Turn a hobby or skill into a side hustle 

• Sell unwanted items around your home

Pay necessary expenses while prioritizing repaying past-due debts 

Now it's time to catch up on payments. After your basic expenses, including your regular debt payments, are paid, attack the late debts. Every dollar you save and every extra dollar you bring in should go towards getting those late debts caught up. Use a budget worksheet or a budgeting app to track your progress. 

What Happens When You Miss a Debt Payment?

Missing a debt payment typically leads to late fees. You might also get hit with a higher interest rate. 

Once your account is 30 days past due, your credit profile is likely to take a hit. The damage is worse if an account falls 60 or 90 days behind. After that, the account is seriously delinquent. 

Freedom Debt Relief isn't a Credit Repair Organization and doesn't provide, or offer services or advice to repair, modify, or improve your credit. 

What happens to the account if you miss a payment?

A missed debt payment could result in a late fee. Your lender or creditor may also increase your interest rate as a penalty. Both of these increase the amount of money you owe.  If you’ve never been late before, immediately call your creditor and ask them to waive the fees and penalties. 

After 90 days, the account is seriously delinquent. It could be charged off, which means your creditor considers it uncollectible. The debt is likely to be handed over to the collections department or a collection agency. 

What happens to your credit score when you don’t pay your debts? 

Missed debt payments typically impact your credit standing and reduce your credit score. Missed payments can remain on your credit report for up to seven years.

Financial consequences of missing debt payments 

If you've stopped making payments on your debts, your accounts may go into default. However, an account won't go into default overnight.  

Typically, you must have missed payments for an extended period for your debt to be considered in default. For example, credit card and personal loan debts usually go into default after three to six months of missed payments. 

Defaulting on debt can lead to negative consequences. It can impact your ability to qualify for credit in the future. If you don’t bring the account up to date, you could be sued for the debt. If you lose a debt lawsuit, the judge could order your employer to send part of your paycheck to the court until the debt is paid off. This is called wage garnishment.

If you have secured debt (debt backed by collateral) like an auto loan or a mortgage, you risk having your property repossessed and sold to cover the debt.   

What If You Can’t Afford to Catch Up on Your Missed Payments?

If you can’t cover your bills with the money you earn, you have a more serious problem. Here are some solutions to explore to help you get back on track with your finances. 

Contact your lenders and creditors

Contact your creditors and lenders immediately if you can't afford to make payments. They may offer a temporary solution if you're experiencing financial hardship. 

Consider debt settlement

If you can’t afford to fully repay your debts, your creditors might agree to clear your debt for less than the full amount. This is called debt settlement. It may be an option if you have unsecured debts like credit cards or personal loans that you're struggling to repay.

You can negotiate a debt settlement with your own creditors. It usually takes persistence and several rounds of communication. If you don’t feel comfortable negotiating, you have the option of working with a professional debt settlement company. 

This type of debt relief could significantly reduce what you owe and help you get your finances back on track. It’s for people experiencing financial hardship who intended to fully repay their debts but can’t.

Moving Forward After Falling Behind on Debts 

If you've fallen behind on debt payments, you're not alone. Temporary setbacks happen, but they don't have to define you or negatively impact your life forever. You can move forward and get your finances back on track. Freedom Debt Relief is ready to help if you're feeling stuck.