Your budget is in the red, you’ve already spent your paycheck, and rent is due. It’s a desperate situation, and it’s hard to make reasonable, sound decisions when you’re desperate.
If you can’t pay rent, it can indeed be a nightmare to deal with, but there are options. Before you do anything rash, consider the following.
Talk to Your Landlord
Your landlord is probably the last person you want to talk to when you can’t make rent, but a little communication can go a long way. Plus, many landlords are surprisingly accommodating.
“A one-time late payment isn’t going to disrupt most landlords,” says Mike Catania, a landlord and rental property owner. “It happens all the time and usually with a flurry of excuses so in that sense it’s like middle school: be honest and upfront and that will mitigate the problem.”
You want to give your landlord as much lead time as possible, too. The sooner you bring up the issue, the better.
“If the tenant doesn’t have a history of late payments and gives me a week or two notice that they’re going to be late, it doesn’t bother me at all,” Catania says. “It gives me ample time to move other money around to make sure all of my expenses are met.”
The problem is, most late tenants will disappear and just skip their payment without any word. This causes unnecessary headache and financial stress on both parties, Catania explains.
Casey Fleming, landlord, property manager, and author of The Loan Guide says that many landlords will work out a repayment plan with you, too.
“If you have been a good tenant otherwise he or she will probably work with you as a one-time accommodation. They may take two separate payments or even reduce the rent moving forward. Yes, for the right tenant I’ve done that.”
Fleming says you should be transparent about your situation and your plans to budget better going forward.
“Explain the situation. How did you get into this mess, and how do you expect to fix the problem? If the issue was an unexpected expense that set you back, show your landlord how you will recover now and then build up a reserve so that the next time it happens you won’t have to ask him to carry you. If the situation is that the rent is just too much for you with your current expenses, show him how you are going to rearrange your budget to have enough money every month from now on.”
Corporate landlords, on the other hand, typically stick to company policies that clearly outline their rules for dealing with late tenants. In these situations, it might be harder to negotiate or ask for help, although it’s worth trying. In any case, look at the terms of your rental agreement, whether there’s a grace period for late payments, and what the penalties are if you are indeed late. Research the laws for your state, too, to see how long you have to make a payment before your landlord is legally allowed to evict you.
Take a Look at Your Budget
Maybe you’re in a paycheck-to-paycheck cycle and you had a particularly rough month. Maybe you lost your job or had another long-term emergency. Either way, it’s time to reevaluate your budget if you haven’t done so already. Take a look at all of your expenses and see if there are any areas that can be cut to make room for next month’s rent payment. This might mean taking public transportation for a month to save on gas, brown-bagging lunch to save money on restaurants, or even picking up an odd job just to help you stay afloat.
Of course, chances are, if you’re in this situation, your budget is already stretched as thin as possible.
“If you really can’t afford it – especially if you’ve been late on the rent in the past – have an honest conversation with your landlord,” says Fleming. “ You really need to move. We have made deals with tenants in this situation where we’ve let them out of a lease in exchange for them vacating by a certain date. Yes, you have to move, but at least you can arrange less expensive solutions until you get back on your feet again.”
Know Where to Get Help
If your issue is a long-term one–let’s say you lost your job–you might need to apply for assistance. Of course, there are programs available, like unemployment benefits, to help you keep your head above water in these situations, but there are lesser known options out there, too. For example:
- Call your credit card companies and ask about hardship programs to lower your minimum monthly payments.
- If you have a federal student loan, apply for deferment to pause your monthly payment.
- Check out Modest Needs. They’re a charity that offers grants of up to $1,00 for workers who can’t make ends meet.
- Check out 211.org, a website that connects you to local charities that may offer assistance.
The Department of Housing and Urban Development also offers counseling from organizations like Clearpoint to help you make the right decisions when you can’t afford rent. Don’t discount friends and family who may be willing to offer a place to stay, too, while you get back on your feet.
What to Know Before Taking Out a Loan
Again, it’s easy to make poor, impulsive decisions when you’re desperate. When many consumers can’t make ends meet, they turn to payday loans as a quick fix.
It sounds good in theory–you take out a small loan to help you stay afloat until your next payday, when you pay it back. Unfortunately, it usually doesn’t work out this way. The majority of payday loan borrowers end up revolving their loan, using another loan to pay off the original one. Interest rates can be as high as 708 percent, leading consumers into a downward spiral of massive debt. Borrowers pay $7 billion annually in payday loan fees in the U.S. alone.
Before you fall into this trap, consider other options. Many credit unions offer special loans through The National Credit Union Foundation’s REAL Solutions® program. These loans are aimed at borrowers who don’t earn much money. Some credit unions also have “signature loans,” aimed at borrowers with bad credit. While you still have to pay back the loan with interest, the terms are much better than payday loans and designed to help you improve your finances. You can find specific credit union loans in the National Consumer Law Center’s Payday Loan report (PDF).
It’s not an easy situation to fix, but it helps to know all of the options available. This way, you can make the best decision possible and keep a desperate situation from getting worse.