Prioritizing debt - which bills do I pay first?

Many people have faced a problem with bills we can’t afford to pay: credit card debt, a doctor’s bill, or an unpaid student loan. You may have enough income to pay some bills, but not all. You may not know which bills to pay first.

Don’t pay anyone to consolidate or settle your debts. Free credit counseling assistance is available if you need it.

1. Food and housing

These are most important. You don’t want to lose your housing or not have enough to eat and stay healthy.

• Renters - If you don’t pay rent on time, the landlord can evict you even if you have a good reason for not paying. For help paying rent, call 2-1-1 for names of social service agencies that might be able to help.
• Homeowners - If you’re behind on mortgage payments, you could end up in foreclosure. If you can’t afford your mortgage payments, you can talk with a housing counselor with the Washington Homeownership Resource Center at 1-877-894-4663. If you have low income, contact the Northwest Justice Project’s Foreclosure Prevention Unit (FPU) at 1-800-606-4819.
• If you can’t afford to buy enough food, contact your local DSHS office. Find out if you can get food stamps. Call 2-1-1 to find food banks in your area.

2. Utilities

You must pay your electric, gas, water, and phone bills to keep these services. Don’t wait for a shut-off notice. Many utility companies have payment plans where you pay the same amount each month so you can budget your money. Ask your own utility companies about payment plans. 

3. Car loans and car insurance

If you need your car for any reason, you must make your car payments on time. One missed payment can result in repossession of your car.

Car insurance is also important. Washington law requires all drivers and owners to have insurance. If you don’t have insurance and you’re in an accident, your driver’s license may be suspended. Don’t let your car insurance lapse.

4.  Child support

If you owe child support and can’t afford to pay, try to make a partial payment each month. Then, contact the Division of Child Support (DCS) or a lawyer. See if you can change (modify) the current support order. If you don’t pay anything, your driver’s license could be suspended.

If DCS is garnishing support from your wages, try to talk to a lawyer about getting the amount garnished lowered or your current support order modified. If DCS agrees to lower your monthly payment amount, they may require you to sign a document, called a waiver, that would give DCS even more time to try to collect support from you than they already have. 

5. Student loan debt

If your debt is from federal student loans, you might be able to put off (defer) making payments. There are also income-based repayment plans based on your current income and household size. Your payments could be as low as zero. If you have a disability, you may be eligible for a disability discharge of your student loan debt. 

If you’re in default on your federal student loans and you’re not in deferment, forbearance, or a payment plan, the Department of Education might garnish your wages or Social Security benefits, or take your federal income tax refund. 

If your debt is from private student loans, your repayment options are different. 

Visit studentloanborrowerassistance.org to learn more about options for both types of student loan debt.

6. IRS debt

Depending on your income, the Internal Revenue Service (IRS) might put your debts “on hold.” In a few situations you may be able to get rid of (discharge) some IRS debt in bankruptcy.

Try to talk to a lawyer. If you have a low income, you may be able to get free help from the University of Washington’s Taxpayer Clinic. 

7. Hospital and medical bills

If you have hospital bills because you went to the emergency room or had to be admitted to the hospital, you may be eligible for Charity Care. This program helps pay all or part of a hospital bill if the hospital determines you have a low income. You can apply for Charity Care through the hospital. 

If you have medical or dental bills or hospital bills not covered by Charity Care:

• Figure out if your insurance should pay for these bills.
• If you don’t have insurance and you have a low income, you may be eligible for Apple Health benefits. Apple Health might be able to cover your bills retroactively.
• Ask the provider’s billing department to reduce (lower) or write off the bill.
• Ask the provider or hospital for financial assistance similar to Charity Care based on your income.
• Ask that you pay the same amount as insured patients pay. This is often much lower than what non-insured patients pay.
• As a last resort, and if you have a lot of debt overall, you may be able to discharge these bills in bankruptcy.

Balance billing (also called Surprise Billing) happens when you’re treated by a medical provider at a hospital or facility that you believe is in your health plan's network, but it later turns out that they aren’t. It’s illegal for an out-of-network health care provider to charge you more for certain services than you would have been charged in-network.

8. Credit cards

If you have credit card bills you can’t afford to pay, you should pay them only if you have money left over after paying other bills. 

If you have a lot of credit card debt and/or medical debt, you may be able to discharge it all through Chapter 7 bankruptcy. 

A creditor or collection agency might try to scare you into paying by threatening you with arrest. A creditor can’t have you arrested. But they can file a lawsuit against you. If you receive court papers, contact a lawyer right away. 

• Don’t talk to them. They’ll try to scare you into paying them money you can’t afford to pay. It’s okay to screen your calls or just hang up.
• Don’t use money you need for rent, food, or other essentials to pay a collection agency.
• Never give a collection agency your personal information.
• Never give a collection agency or other creditor your bank account information or authorization to withdraw money from your bank account.
• If the collection agency is contacting you more than 3 times a week, contacting you in the middle of the night, or threatening you, they’re violating federal law. Contact a lawyer as soon as you can. 

Don’t ignore court papers, even if you think they’re for someone else or you don’t owe the person suing you. You have 20 days from the date the court papers were handed to you to file a written response. You should also try to talk to a lawyer as soon as possible. 

The creditor now has a court order called a judgment that lets them use tools such as garnishment of your income or property to collect what you owe them. 

You can try to offer the creditor less than full payment of the judgment or offer a payment plan. The creditor can but doesn’t have to accept anything less than what the judgment says you owe. 

It might be very hard to appeal a judgment or get it set aside once the case is over. Try to talk to a lawyer to figure out what your options are.

It depends. If the case was over child support debt, federal student loan debt, or some other debts to the federal government, your income can be garnished. But the law protects certain types of income and property from garnishment by other types of creditors.