Rowe, Barbara R.

English

DigitalCommons@USU

1Adapted from When Your Income Drops, written by Barbara Rowe and Denise Schroeder, PurdueUniversity Extension Service, West Lafayette, IN 47906.1February 2002 FL/FF-I-07 KEEP A ROOF OVERHEADBarbara R. Rowe, Ph.D.Professor and Family Resource Management SpecialistUtah State University1Keeping a roof overhead is an importantconcern when your income drops. When you rankyour bills in order of priority, chances are shelterand utilities top the list.When you’re under the financial stress ofreduced or lost income, one of the biggestexpenses is housing. Housing expenses includemortgage or rent payments, insurance, taxes,household maintenance and repair, utility bills,appliances and furnishings.When family income drops, carefulplanning can help you avoid eviction from yourrental unit or loss of your house. It is important torealize that when you’re in financial difficulty anddon’t relish talking to anyone, you cannot ignorefinancial obligations, particularly mortgage or rentpayments.Mortgage PaymentsHouse payments can eat up as much as 30to 40 percent of your family budget. What does afamily do if a job is lost and income stops? If yourloss of income will only be for a few months, youmay be able to cut back on other expenses to meetyour mortgage payments.Important: If you miss a mortgage payment,you have defaulted on your contract and yourlender can begin foreclosure on your home.If meeting your mortgage paymentsappears impossible, contact your lenderimmediately before you miss the first payment.Remember, most creditors want to work with you.They would prefer to work out a way for you tosucceed in keeping that house if an alternativearrangement can be worked out. You may be ableto skip a payment or arrange a lower payment. Goin person to see your lender and take along a copyof your net worth statement (see “Take Stock ofFamily Resources”), a projection of income andexpenses (see “Set Priorities for Spending”) and aplan for continuing to meet at least part of thepayments with your family’s financial situation inmind.If your family’s loss of income is going tolast a long time or be permanent, you will need toconsider other options. Could you rent a spareroom or share the house and the mortgagepayments with others? Rent your house tosomeone else and rent less costly housing foryourself? (Check the affect this will have on taxesand insurance coverage). Move in with relatives or2friends and share some of their housing costswhile renting your home? Sell your house and buyor rent less costly housing?As a last resort, you can deed your houseback to the lender. You might not lose much. Ifyou have been paying on a 30-year mortgage for10 years, you have not paid for much of the houseyet–only about 10 percent. If you choose deedingthe house back to the lender in place offoreclosure, and the house has decreased in value,you are still responsible for the difference betweenthe value of the house now and the amount of theloan. If, by staying in the house, you won’t haveenough money for food and other necessities, youmay find it less stressful to leave the house andfind less expensive housing.Rent Payments If you rent, tell your landlord about yourincome situation before your rent is due. Ask for atemporary postponement until your incomeresumes. Offer to provide some service, such aspainting, in exchange for rent. Suggest makingsmaller payments for a month or two, with theunderstanding that you will catch up when yourincome increases again.Be familiar with the terms of your lease.Does your lease include a “late clause” that wouldallow you five to ten days to pay overdue rent?Check your lease for a statement about “latecharges.” If you do not have a lease or otheradvance agreement to add “late charges,” nonecan be billed to you.If you do not pay your rent, Utah lawallows your landlord to evict you. Eviction is afive step process, the first part begins when theowner gives you a written notice to leave thepremises. It should give you a choice to either paythe amount owed OR move out within three days.The count begins the day after you are served andincludes weekends and holidays. If you do not paythe money within three days, the landlord goes tothe second step, which is to file a complaint andsummons with the court. You must reply inwriting within three business days. If you file ananswer with the court on time, you will generallyhave a trial. At the trial the judge will make adecision, which is then put on paper and signed bythe judge. If the landlord wins, the judge willorder you to move out and pay the landlordwhatever money you owe in rent plus tripledamages. You may also have to pay the landlord’sattorney fees. If you fear becoming homeless afterbeing evicted, there are community services thatcan help you. See “Take Stock of CommunityResources,” number three in this series ofpublications.Other Housing CostsUtility PaymentsMonthly utility payments may includecharges for gas, oil, electricity, telephone serviceand water. The customer has the full billing period(minus processing time) to pay. Typically if thebill is not paid by the billing date of the nextmonth, a late penalty is assessed on the amountoutstanding. When bills are 12 days past due, anotice is issued either to remind you that you arelate or that utility services will be disconnectedimmediately if payment is not made, depending onyour past payment history.If you can’t make full payments on a utilitybill:• Contact the company right away–beforethe due date and before additional serviceis needed.• Propose a new payment plan based on yourcurrent ability to pay. Take alonginformation about your income andexpenses (see “Set Priorities forSpending”) with you when you go to autility company.• Check with your local power company tosee if fuel assistance programs areavailable. What are the qualifications?• Talk with family members to decide howto safely reduce the use of your utilities tosave money.If you get behind on your utility payments,and service is disconnected, either the bill must bepaid in full or a pay agreement reached before3service is reconnected. An additional re-connection fee will be charged.Insurance PaymentsHomeowner’s or renter’s insuranceprotects you in case of loss or damage to property.If you can’t make an insurance premium paymentduring a time of reduced income, call or writeyour agent or the company. There may be someleeway (a 10 to 30 day “grace period”) for a latepremium payment.Note: Not paying insurance on your mortgagedhome is considered defaulting on the mortgage.When you talk to the insurance companyrepresentative, explain your family’s situation andoffer a different payment plan. Check thepossibility of smaller premiums if you:• Change to a monthly, quarterly, or semi-annual payment plan with the samecoverage. There will be a service chargefor making a smaller payment and this isbased on the amount of the payment. Check thetotal yearly amount difference, and select thepayment plan that will give you the most savingsand still fit into your family’s spending plan.• Change the deductible.• Examine coverage on other buildings andstructures on your property.• Change to a more basic coverage.• Check for possible discounts if both houseand auto insurance is with the samecompany.Real Estate TaxesIf you are unable to pay taxes, contact yourlocal county treasurer and to learn about theprocedures used when property taxes aredelinquent. Interest accumulates on unpaid taxes,and you must pay this interest or it becomes a lienon your property just like the unpaid taxes. You’llreceive notice of any actions taken as a result ofnon-payment of taxes. Take these noticesseriously. Eventually, unpaid taxes will result inthe sale of your property through auction.Utah State University is committed to providing an environment free from harassment and other forms of illegaldiscrimination based on race, color, religion, sex, national origin, age (40 and older), disability, and veteran’s status. USU’s policyalso prohibits discrimination on the basis of sexual orientation in employment and academic related practices and decisions.Utah State University employees and students cannot, because of race, color, religion, sex, national origin, age, disability,or veteran’s status, refuse to hire; discharge; promote; demote; terminate; discriminate in compensation; or discriminate regardingterms, privileges, or conditions of employment, against any person other wise qualified. Employees and students also cannotdiscriminate in the classroom, residence halls, or in on/off campus, USU-sponsored events and activities.This publication is issued in furtherance of Cooperative Extension work. Acts of May 8 and June 30, 1914, in cooperationwith the U.S. Department of Agriculture, Jack M. Payne, Vice President and Director, Cooperative Extension Service, Utah StateUniversity. (EP/DF/02-2002)

Keep a Roof Overhead

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Keep a Roof Overhead

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