What to do if you can't pay utility bills

Key takeaways

  • Roughly 1 out of 6 American households struggles to pay for utilities, such as electricity, oil, and gas.
  • If you don't pay your bill, it could lead to extra fees, credit score damage, and service disruptions.
  • You could get utility bill support from government programs along with many nonprofits.

Rising costs have been squeezing budgets around the country. In 2022, more than 20 million American families, or about 1 in 6, were behind on utility bills, according to the National Energy Assistance Directors Association.1 If you're worried about covering these costs—think: oil, gas, electricity, cable, phone, internet, sewer service, trash pickup, and water—there are ways to keep your utilities running while protecting your finances. Here are some tips for when you can't pay your bills.

What happens if you don't pay your utility bills?

"We find that bills that don't have an immediate impact (like certain utility bills) get pushed to the back of the payment line," says Leigh Zydonik, executive director of the Foothills Food Bank & Resource Center, which assists families in need in the Phoenix, Arizona area. On the other hand, "needs like car repairs, emergency medical bills, and cell phone payments are must-pays to stay employed and connected."

But if you don't pay your utility bills, you could run into several issues, depending on how late you are. These could include:

  • Late payment fees: Your utility bill includes a payment deadline. If you miss this initial deadline, and potentially a grace period that follows it, the utility company could add a late fee to your balance.
  • Loss of service: If you don't catch up on payments, the utility company could shut off your service. That means your home could lose electricity, oil and gas for heating and cooking, phone, internet, trash pickup service, or other essential services.
  • Reinstallation penalties and deposits: The utility company could charge you a reconnection fee to restart the service. It could also ask you to put down a security deposit in case you can't pay bills again.
  • Collections: If you never pay back your bills, the utility company could send the debt to a collections agency. The collections agency will contact you repeatedly for payment and could add additional fees to your bill. Be sure to watch out for scammers posing as debt collectors, who may call at odd hours, pressure you to pay by money transfer or prepaid card, or threaten to tell your friends and family.2
  • Credit score damage: Once your bills go to collections, the utility company could report the issue to credit rating agencies. Your credit score could go down and make it harder for you to qualify for loans, credit cards, and other services in the future.

What happens and when depends on the utility type, your contract, and your state. For example, in New York, you have 20 days to pay your utility bill for gas and electricity after the deadline. If you take more than that to pay, the utility company can charge a late payment fee worth 1.5% of your unpaid balance. If you fall further behind, the utility company will give you a 15-day written warning before it plans to shut off your service. So your utility company might give you time to catch up on delayed payments, but the longer you wait, the worse the consequences.

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What to do if you can't pay your utility bills

  1. Contact your utility company.

    If you can't pay your utility bills, "call the utility company as soon as possible to make arrangements," Zydonik says. For a temporary money issue, for instance, you could ask for a short payment extension of a few days to avoid late fees. If you're usually on time with payments, you may get a yes.

    If you need more time to pay off the full balance, you could request a longer-term repayment plan. In that case, the utility company may work with you on a monthly payment that better fits your budget. You could also request a temporary payment delay if you've had a medical emergency or declared bankruptcy—or if shutting off utilities would be dangerous, such as turning off the heat during cold winter months. If you're already behind on payments, you could ask for a deferred payment agreement to help you pay off your past-due balance over a set period of time.

    Finally, Zydonik suggests paying what you can, even if it's not the entire balance: "A number of our clients feel it's an all-or-nothing proposition when it comes to paying their bills. Applying what is possible goes a long way in gaining support to get through a downtime."

  2. Apply for utility bill assistance programs.

    If you need help paying bills, beyond what your utility company can offer, several programs could be an option:

    Federal assistance programs: The federal government helps with energy bills through the Low Income Home Energy Assistance Program (LIHEAP). They're run at a state level, and whether you qualify depends on where you live. The federal government could also help pay for your phone and internet through Lifeline if your income is 135% or less than the federal poverty guidelines for your family size.

    State and local assistance programs: You likely can find a list of utility bill assistance programs through your state or city's Department of Social or Community Services or Board or Commission of Public Utilities, such as these for New York City, Texas, and California.

    Zydonik acknowledges that researching and applying for all these government programs can feel overwhelming. But local resource centers might be able to explain how to get help with utility bills. "We've been able to aid our neighbors to navigate the labyrinth of local, regional, and national services that can keep their utilities up and running."

    Charities and nonprofits: Speaking of assistance programs, religious and secular charities and nonprofits could offer emergency help with utility bills. You could also turn to charities for other types of support. "Utilizing local food banks allow dollars to be used elsewhere," says Zydonik.

How to stay ahead of your bills

  1. Lower your essential bills.

    Think of how you and your family could potentially consume less energy to save on your electric bill, gas bill, and water bill. For example, you could install low-flow taps, keep your house a little cooler in the winter and warmer in the summer, and unplug appliances when you're not using them. You also might be able to cut costs by switching to a phone plan with less mobile data, bundling services such as phone and internet, or choosing a family plan for phone service.

  2. Trim nonessential costs.

    Are there any expenses you could cut back on, such as dining out, gym memberships, or streaming services? You don't want to make yourself miserable, but spending less on these nice-to-haves helps to free up more money for paying your utility bills and reaching long-term money goals.

  3. Shop around for lower-cost utilities.

    You might be locked into a certain provider for gas, electric, and water. Still, you have options for your phone and internet. Call other companies and compare their prices with what you're paying. Go with who offers the best plan to match your needs at the lowest price, but watch out for significant cancellation fees for switching services or fine print that might increase your payment over time.

  4. Create and track your household budget.

    Do you know where all your money goes each month? If not, create a budget listing all your income and spending, including bills. Pay attention to the average cost of each monthly bill, plus the times when they're likely to spike (electricity in the summer and gas in the winter), so you can plan ahead.

  5. Avoid unnecessary fees whenever possible.

    When you miss a bill payment deadline, you not only owe the bill itself but also an extra penalty fee. These add up and push you further into debt. Keep track of all your payment deadlines to steer clear of these unnecessary charges. Better yet, if you can keep an account fully funded to afford your utility bills, consider setting up automatic payments from your bank.

    Zydonik says to watch out for fees that come up from how you manage money. For instance, if you bring paychecks to check-cashing stores, you could be spending more than if your paychecks are direct deposited into a bank account for free.

    You might be wondering: Can you pay utility bills with a credit card? The answer is yes. That could potentially give you more time to come up with the cash as you wait for your monthly credit card bill. One warning: Credit cards typically charge higher interest rates and penalties for late payments than utilities. So ideally you would have a concrete plan to make the full credit card payment on time.

  6. Build an emergency fund.

    Sometimes unexpected financial emergencies, such as a medical bill or job loss, come your way. Prepare for rough times when times are good. Aim to build an emergency fund that can cover 3 to 6 months of living expenses. That way, if life throws you a curveball, you might not have to fall behind on utility bill payments—and deal with the fees and other problems that can come with that.

Can't make other payments? Get steps to help cover those bills and more in the Fidelity Smart MoneySM Playbook: How to help crisis-proof your life. 

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1. "Families Drowning in Utility Debt – Families Owe More than $16 Billion," National Energy Assistance Directors Association, November 7, 2022. 2. "How to tell the difference between a legitimate debt collector and scammers," Courtney-Rose Dantus, Consumer Financial Protection Bureau, November 20, 2019.

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