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It is extremely difficult to setup a budget, especially
when you are behind on some of your bills. Even if you
can make your regular bills and expenses fit neatly into
your budget, what can you do if you don't have the money
to catch up?

I have listed several methods and circumstances below
that may help manage setting up your budget and begin to
pay those overdue bills. Since there are as many
different budgets as there are people that try to set
them up, this list may not be all inclusive. It may,
however, give you some ideas that will fit your
individual problem.

Unless you don't have any income at all, there are a
couple of things that should never be late. Your rent
or house payment and utilities should be paid first,
even at the expense of other bills. This is simply a
matter of survival.

The first thing you need to do when setting up a budget
is to determine how much actual take home income you
have. Then determine the amount of your normal bills
and expenses. The Complete Budget and Bill Organizer
http://www.homemoneyhelp.com/BBOonline.html explains
this in greater detail and provides forms to put it on
paper.

The below methods assume that you have enough money to
cover your normal bills and expenses but have some
bills that have an amount that is overdue:

When you are setting up your budget and have overdue
bills you need to cut your expenses to the bare bones.
This doesn't mean going without food. However, there
are many ways to cut back on expenses. You can find
hundreds of them by visiting my Budget Stretcher
Partner sites listed at http://www.homemoneyhelp.com.

You should always make the initial contact to the
company any time you aren't able to pay a bill on
time. Once you have your budget setup, see if there
is any money left over to start paying the amount that
is behind. If you do have some money left over, when
you contact the company, find out if they will accept
paying a little extra each month, without penalty,
until the overdue amount is paid in full.

Contact a your local Consumer Credit Counseling Service.
You can find them in your phone book. They can assist
you by contacting your creditors and establishing a
payment schedule that will fit your budget.

If your overdue bills are credit cards, consider
transferring your balances to either a credit card you
already have or can obtain. This will do a couple of
things. It will normally lower your monthly payment
and it will eliminate your overdue status. Be extremely
careful doing this. The credit card companies you paid
off will be using every means they have to get you to
use their credit cards again. Cut them up and notify
the company to close the account.

Look for ways to get extra money just for the purpose
of paying your overdue bills. This can be either a
temporary part time job or selling something that you
can do without.

If you own your home and have equity in your property,
you may want to consider a bill consolidation loan.
While this seems like an easy out, many people start
obtaining more debt after they receive the loan since
they have some disposable income. There are pros and
cons to bill consolidation loans and you would be wise
to investigate it thoroughly.

If you have exhausted all of the above options, you may
have to consider one of the below options. You must
remember that filing bankruptcy can stay on your credit
history for up to 10 years and can have a devastating
effect on your future financial plans.

In extreme circumstances, and always as a last resort,
consider filing Chapter 13 bankruptcy protection. This
allows an individual to setup a repayment plan of
between 3 to 5 years to pay off all or part of their
debts. You must have sufficient income to permit a
portion of it to be used toward your repayment schedule.

Another option is Chapter 7 bankruptcy which is the most
commonly filed chapter since it can completely eliminate
all of your debt except the ones you choose to continue
paying. There are exceptions to debts that can be
discharged and to what property is exempt from being
taken by your creditors. You should discuss any bankruptcy
actions with a competent bankruptcy attorney. Only
individual's may file for chapter 7 or chapter 13 bankruptcy.

Just because you are behind on your bills doesn't mean
that your bill collectors can do what ever they want to
collect their debt. You have rights under the Fair Debt
Collection Practices Act. It would be a good idea to
visit The Federal Trade Commission's web site
http://www.ftc.gov/bcp/conline/pubs/credit/fdc.htm to
find out what your legal rights are.