How To Catch Up With A Late Payment (Sample Letter)

Estimated reading time: 24 minutes

Are you dealing with late payment troubles? Find out how to navigate the challenges and protect your financial stability.

A Late Payment Penalty Will Cost More Than Money

Late payment stress begins before a payment is late and increases into a migraine, especially when you struggle to make ends meet.

A missed credit card payment, falling behind on bills, or even a late mortgage payment, including loans, can set you back financially, especially when expenses mount.

You are faced with extra costs arising from interest, and you are faced with the difficulty of sorting out the late payment and pressing your credit report.

One of the first signs of financial breakdown is when bills start going unpaid, leaving creditors scrambling to try and get money from you, even a bit.

The phone might start ringing off the hook, letters may arrive in the mail, or you may even get a knock on your door with a registered letter.

Avoid late payment credit score notes on file because they can hurt you in the future if you need a loan or mortgage, apply for a rental apartment, or even apply for a credit card.

How To Catch Up With Multiple Late Mortgage Payments

This can be tricky, especially if you have an irregular income or were expecting a pay cheque that didn’t come through, but your bills have come due.

Steps In The Right Direction

Below are a few suggestions that would help get you organized and help you take steps to pay off the late bills.

Create a debt repayment plan using our free debt repayment printable

1. List who you owe money to and consistently track your bill payment dates
2. Automate bill payments if possible and make sure money is in the account each month
3. Contact whom you owe money via phone, email, or by writing a letter.
4. Create a budget if you haven’t already.
5. Pay off the bill collectors screaming for money first to get rid of them.
6. Create a payment plan (who you will pay and how much you will pay) –Snowball your payments if you can’t pay them in full. The snowball method is paying the smallest debt first and the minimum payment on the more significant debts.
7. Earn more money, ask for a raise. Extra cash might be beneficial if you can’t pay your bills on time each month. You could even start a blog!

How To Remove A Late Payment

I remember the first year we moved into our house, and we had a late payment charge the first month because we forgot to pay our city taxes.

At the time, we planned to pay our taxes manually instead of including them with our mortgage, which most people do.

I have no idea why we chose that route, but we did and nearly got dinged for it.

It was early afternoon when I brought the mail home, and there was a letter from the city stating that we had made a late payment for our city taxes.

Immediately, my wife got on the phone with the tax department to plead our case.

How would we eliminate this late payment charge that could affect our credit score?

It would most definitely be on our credit score.

Any time you have a late payment, it will show up for creditors when they access your credit report.

First, I want to say that the outcome of our situation may not be what you will face, as every organization is different.

Removing A Late Payment Scar

To remove a late payment, you should first call and plead your case.

Second, you need to have the cash ready to pay it in whole, or else they will probably tell you, sorry.

In our case, it was our first month moving into the house, and they let us off, thankfully citing the overwhelming number of things new homeowners must go through.

We got lucky, but it wasn’t the only time we had a late payment on a bill that caught us off guard.

Late Payment Penalties

A late payment penalty can be anything from interest charges to putting a hold on your payment date.

If you are dealing with a late mortgage payment, you may get one month’s forgiveness, as some mortgages have a clause that allows you to skip a month.

It’s essential to make a phone call as soon as you know you will have a late payment or if you know you will have a tough month paying bills.

Fixing A Late Payment Issue

It doesn’t matter if you are three days or one day late with a credit card payment or any bill.

You will likely be charged interest and put in the credit report clinker (jail).

Related: Why People Hate Knowing Their Debt Repayment Numbers (Free Printable)

An overdue payment is late when the money has not been processed, whether you paid it into your bank or not.

Many banks take up to three days to process a bill payment, so always pay your bills at least a week in advance or go directly to the source to deliver it.

For example, if you have a hydro bill to pay, go straight to the hydro department to deliver it rather than putting it through your bank.

Alternatively, auto payments are a great way to ensure your bills are paid on time, but you can’t pay them when there is no money in the bank to pay for them.

This is the case for most people who fall behind with late payments, which is what happened to us earlier this year.

Sort Out Bank Accounts

Since we have four bank accounts with Simplii Financial, we move money to our monthly chequing account for bill payments and investments.

After my father-in-law passed away in 2018 and his bank account was frozen, we panicked and went straight to our bank.

Mrs. CBB and I had separate accounts because I tried to build credit in Canada.

Since I had been here long enough to have a high-standing credit score, we should have taken steps earlier to put our bank accounts in both names.

We went through the process to do so, but the overdraft on our chequing account did not follow suit.

That meant we left ourselves open to disaster if we didn’t have enough money.

Use The Banks Money Wisely

Overdrafts were always just for emergency purposes, but in this case, they weren’t enough to cover our investments that went through NSF.

After many phone calls and a written letter apologizing and stating our case, we were happy to hear that the late payment wouldn’t affect our credit score and that it was handled.

This may not happen for everyone, but it’s a shot if you fall into a late payment by error, as we did.

We’ve added a larger overdraft cushion just in case, and we track all of our bill payments on paper to ensure they get paid monthly.

Late Payment Letter (Sample)

You can go to my free downloads page to get the PDF or Word document you can edit and print to make things easier.

Below is a sample letter you can edit as you see fit, which you can use to send to your bill payment companies. (remove this before you send it).

Sample Letter

Date:

Your First and last name

Full Address

Phone number

Company Name (Who the bill payment is for)

Full Address

Phone number

To whom it may concern (or personalize with a name)

I’m writing to inform you that I am struggling with our financial situation at home, which means I’m paying for my (insert bill payment here, including account number).

We are working on a strategic budget plan to get back on track, but in the meantime, I’m hoping we can arrange to pay the bill in full by (insert date).

I’m hoping we can work on removing any notes that may be left on my credit report since I’m an excellent customer, and this is my first time being late with a payment.

I’d happily accommodate your schedule if you’d like to talk on the phone or in person.  Please get in touch with me at (insert your phone number here).

I’m looking forward to hearing back from you.

Regards,

Mr/Mrs. Peabody

Pay For The Late Payment Immediately

Whatever you choose to do with a late payment, make sure you pay it in full by a set date and contact whom you need to pay before anything else.

Letting them know you are aware of the late payment and that you plan to do something about it might keep you in their good books.

Just try not to let it happen month after month.

Related: How to handle a missed bill payment for the last time

Discussion: How do you handle late payments when paying your bills?

Money Earned In February 2019

February was a good month for our income, especially on the blog, where we earned an impressive almost $3500, which is not reflected in our above net income as I keep it separate.

However, I add it to our monthly net worth updates but don’t increase the figures as I’ve never really blogged about it before.

I don’t think that will happen every month, but earning extra income is an excellent way for anyone to supplement cash flow.

I’ll write more about blogging and earning money this year, so prepare for that, especially if you’ve considered blogging for extra cash.

It was nice to see that we put more into our emergency savings this month since we haven’t had too much extra sitting around the last couple of months.

In February, we also had to pay Mrs. CBB to get a crown from the dentist.

She still needs one more crown, so more expenses that were not expected will be coming in 2018.

We’ve been looking for an occupational therapist for our son, who needs help focusing on daily life.

This will be another blog post to write, which will be a bit emotional for both of us.

It ‘sIt’s that time of year when we start signing our son up for spring and summer sports.

This year, we have him swimming, baseball, and soccer, and we have a gig where they teach kids a variety of sports that he loves.

Budget Percentages February 2019

Our savings of 40.87% include investments and any savings for this month based on the income of $9566.94.

We put money away for the projected expenses that must be paid in the coming months.

All categories took over 100% of our income, which shows that we had to pull money from the emergency savings account to pay for it.

Our Monthly Expenses

Below is a breakdown of our expenses, which helps us understand where all our money goes.

Since May 2014, we’ve mortgage mortgage-free, so much of our money will be directed where and renovations.

I appreciate that you enjoy this budget update each month.

Still, I hope you view this as an educational tool rather than comparing your financial numbers, as our situations are unique.

Spending less than we earn and budgeting our money has been the easiest way for us to pay down debt and save money. It may be different for you.

1. Chequing– This is the bank account from which all our debt is paid.
2. Emergency Savings Account– This is a high-interest savings account.
3. Regular Savings Account– This savings account holds our projected expenses.
4. Monthly Budgeted Total: $4792.05
5. Monthly Net Income Total: $9566.94
6. (Check out our Ultimate Grocery Guide to see where our grocery money goes)
7. Projected Expenses: These are expenses we know we will pay for throughout the year = $213.01
8. Total Expenses Paid Out: $7335.56
9. Total Expenses Paid Out: Calculated is $956.94 (total net monthly income) – $213.01 (projected expenses) –$ 2018.37 (savings from the emergency fund) = $7335.56
10. Actual Cash Savings going into Emergency Savings: Calculated is $9566.94 (total monthly net income) – $7335.64 (actual expenses paid out for the month) – $213.01 (costs projected) = $2018.29

Our Budget Results

It’s time for the juicy category numbers and to see how we made out with our monthly budget.

Below are two tables; one is our monthly budget, and the other is our actual budget for February 2019.

This budget represents two adults and a toddler plus retirement investments.

Budget color chart: If highlighted in blue, that means it is a projected expense      

Note: We decided to keep our grocery budget at $410.

Our FREE Simple Budgeting Series

Do you want to learn to budget like we do? Please take the time to read through our budgeting series, plus read Budgeting in the New Year.

I hope the information will help stop you from making common budgeting mistakes.

Our Ultimate Budgeting Guide from A to Z has everything you need to know about budgeting in one blog post.

1. How We Designed Our Budget Step 1– Gathering All the information
2. How We Designed Our Budget Step 2– Budget Categories
3. How We Designed Our Budget Step 3– Tracking Receipts
4. How We Designed Our Budget Step 4- Note-taking
5. How We Designed Our Budget Step 5– 5S Organization
6. How We Designed Our Budget Step 6– Who Does What and When?
7. How We Designed Our Budget Step 7– Balancing Our Budget
8. How We Designed Our Budget Step 8– Knowing our Coupon Savings
9. How We Designed Our Budget Step 9– Reading Our Bills
10. How We Designed Our Budget Step 10– Projected Expenses

Budget updates month by month

If you missed our budget updates and want to do a quick search, I’ve added them on one handy page: monthly budgets.

2019 Budget Challenge- 7 Monthly Budget Reports

When I was looking for people to join the CBB 2019 Budget Challenge in December, I had over 20 people interested.

I’m thrilled to say we have 7 CBB fans who reported and are 100% in the Budget Challenge.

As they go along, you may see their budget reports increase in data, which I expect, mainly because it’s a learning experience for all of us.

The budget reports below will remain anonymous unless the writer uses their name; each will be unique.

They get to choose how they report their budget back to us.

Here we GO!!!

P.S.- Don’t forget to leave them a comment about their budget challenge report.

Budget Report #1

Our Valentine was VERY quiet because I found an astonishing GIC rate, so I cleaned out the vacation accounts and invested the money for 23 months!

I guess it’s time to start saving furiously again if I want to go away in 2019 or 2020.

Hubby says once money goes into our accounts.

I hate to take it back out for any reason.

We live within the budget, period, full stop.

So enjoy it, invest it, watch the interest compound, ah!

We started our ValeValentine’s night before when I asked him if he would be my Valentine for the 31st year in a row! I am thrilled to say he agreed once again!

I hurt myself on the 13th, so our special dinner got postponed one night so that I could fully enjoy it.

On the 14th, we had a bottle of Chilled Raspberry juice in the fridge for our “win” substitute.”

We made a pot of Creamy and Brothy Potato Soup for our meal.

Did Hubby know I also had a cinnamon bun and tea planned for his dessert?

Sneaky devil, aren’t I?

The Valentine’s, pushed back to the 15th, was the FREE jumbo shrimp re-heated briefly with a dry garlic sauce and served alongside Steamed Carrots, Snap Peas, Onions & Assorted Bell Peppers, and a bed of rice.

Not bad for a stay-at-home supper, even if it was one day late?

My Valentine’s Treat

I did get a little Valentine’s present this year.

Hubby used his weekly allowance to pick up a box of dark chocolate salted caramel at Purdy’s.

OMG, they are sinful!

I can’t tell you how much that box of chocolates means to me.

From me, he received a bag of Sour Jelly Bellies (on sale for $2) and I gave it to him for his lunchtime surprise.

Medical Expenses

I finally got the medical expense claim forms for 2018 done and sent them to our extended insurance company, so I am anxiously awaiting a cheque.

When we get it every year, it goes straight into our Car Replacement account.

I want to pay cash the next time we purchase a car, and I figure it will probably be our last car purchase when Hubby retires.

There are no financing charges for us.

See what I mean: un-budgeted money goes straight to savings?

I have 7/8 of our following vehicle funds already saved up.

Once that’s done, I’ll have time to save for our next roof replacement and upgrades on the furnace and heat pump, at least another $40,000 to update them all.

I could cover them now if I had to rob Peter to pay Paul, but I’d rather wait and have a fistful of cash, so I’m dipping into our emergency funds.

End Of Year Financial Strain

The first part of the year is always tight for us, as is the end of the year.

There are TFSA fees to pay, and until we hit a certain $$$ threshold, we will have some pretty hefty prescription costs despite our extended medical coverage and the annual car insurance renewal cost for the following year.

At the same time, I am also getting ready for our income tax returns, accounting fees, property taxes, RRSP and TFSA contributions, and annual contributions to our non-registered investment accounts.

I try to send as much as possible each year to the brokers.

I feel better the more I can send for long-term investment. It’s out of sight and out of mind until it comes up for maturity and re-investment.

End Of Year Budgeting Expenses

At the end of the year, it’s about bills, house insurance, travel medical insurance, BCAA membership, renewal of the Costco membership, and, of course, all the various holiday season expenses.

This Christmas will be cheaper, though, because although Hubby will be on vacation, we’re home and enjoying some nice little day trips.

I don’t have a lot of wiggle room in our budget, actually none, if truth be told if I want to accomplish all of our 2019 goals, so I have been looking hard at our meal plans and keeping grocery shopping to a dull roar.

Usually, I budget $190 a month, but I plan to channel $100 of that back into the vacation accounts this year!

Budgeting Our Wedding Anniversary

This year is our 25th wedding anniversary, and I want to make sure we can celebrate in style despite my emptying the vacation accounts and investing the funds for a whirlwind kind of trip.

I have a suite booked at the Westin in Whistler for 10 days to celebrate our special anniversary.

I have four holidays booked this year using points for the hotels, and I think I can manage the meals and gas for all of them with about $1000 total because breakfast and supper are included for three of the four trips.

It’s overtime for the pantry and freezer at our house anyway…it’s it’s a bad thing to do every once in a while.

So, February closed with $300 in our vacation savings after I stole $100 from the groceries. I hate zero-balance bank accounts, don’t I?

Budget Report #2

So, looking at some of the comments on last month’s post, I wanted to put a bit more detail into this month’s overview of spending.

I follow the Gail Vaz Oxlade budget, which breaks down your spending into five categories: housing (35%), life (25%), transportation (15%), debt repayment (15%), and savings (10%).

Because I don’t have any debt other than my mortgage and car (which I lump in with transportation and housing), I leave 10% to fiddle around with, depending on my monthly needs.

For the last couple of months, this extra category has helped me pre-pay for the vacation I took this month.

So, in looking at February Housing, like every month, I stayed under and put the extra money into savings.

I put this money aside every month to put towards a one-time extra payment each year that I’m allowed to do to pay off my mortgage faster.

I’m allowed to contribute $8600 extra a year towards my mortgage as long as I do it before October 28th – so I always wait until that week to ensure there isn’t a pressing need for the money.

If I can do this again this year, I will be MORTGAGE FREE!

My goal has always been to be mortgage-free before 40, and I’m on track even if I can’t make the extra payment this year – and it feels good!

Using Extra Money Wisely

This month, I had $193.8 extra to put aside for October. Transportation: this month, I went slightly over my allowance.

I had booked a car rental through my air miles points but still had to pay some out-of-pocket money.

My flight got changed on the day of my flight, and I arrived 5 hours early.

I could either sit around the airport for 5 hours or rent a car for an extra day – which is what I did.

Between the extra fee, gas fill up, and the American exchange rate, I went over by $124. 42.

Life: this category always gets me. I’m rarely under, so some of my extra money normally allotted to debt repayment usually finds its way here.

On top of my normal overspending in this category, I bought myself some things while on my vacation, and sigh, I hit black ice before my trip and put my car into a tree.

When all is said and done, and I use up all my extra room from my debt repayment money, I’m over by $475, which I don’t too bad about.

Savings: I put my complete 10% into savings this month.

I have about $600 on my visa, which is waiting to be paid.

I have the money in my savings account to pay it, but I generally wait until the last day to pay off my balance.

Mental Health Needs

My biggest accomplishment of this month was getting my mental health under control.

Being depressed all of last month had me spending money on everything in sight that I thought would bring me temporary happiness (stress eater!).

I am proud that I didn’t do it at all this month.

Next month, I hope to get back in the swing of things by going to the gym more often, listening to my Spotify account, and watching my Netflix account.

These all seem like little money each month, but if they’re being used, it is wasted.

Budget Report #3

It’s been a busy month, and we’ve had a lot of personal changes and adjustments.

Most expenses were in line with our budget, but we bought a few new cat toys that put us over our pet budget, and as usual, our food expenses exceeded our budget.

This month’s ‘Everything Else’ category included cake supplies, birthday gifts, my son’s birthday party, my contacts, personal care, miscellaneous shopping, and household items.

We bought a handheld Dyson vacuum this month, and despite it being a large (and somewhat unplanned) purchase, I am happy with it! I can’t believe I waited this long to get one.

With two cats, it makes cleaning up hair and litter a cinch.

We are also saving for a cruise in December. 

It’s the first big family vacation we’ve been all together since 2009, so I’m excited about that, too.

PROS:

• I got a raise (woohoo)!
• We earned extra income from overtime hours.
• We continued to pay down our debt.

CONS:

• My hours changed at work, so now we must pay for our daughter’s after-school daycare.
• This month, we still struggled to get our food (groceries, takeout, restaurants, coffee & alcohol) budget down.

Overall, I am pleased with our budget this month. 

We still have some things to work on aggressively, but I’m optimistic.

Budget Report #4

Good morning,

Improvements from last month.

Fails:

• A little too much takeout still

Successes:

• All bills are paid on time.
• Saved $800 towards our savings goals
• I paid off two credit cards.
• Put more money in my RRSP before the end of February for the tax deduction.

Improvements:

• We continue to eat out of our pantry, fridge, and freezer.
• Less takeout.

Budget Report #5

Current Status: 116% to budget

Wins: Three categories came below budget: Auto, House, and Child.

The money spent on my child came in the form of a subsidy from the government for child care.

I’m looking forward to when he starts Kindergarten, though; with one on the way, we’ll get out of childcare that easily, but at least for a year, we can breathe.

We lucked out this month for the Auto category, and the Vancouver gas prices stayed lower than last year, which helped a bit.

I have pet chinchillas whose expenses get put in the house category. Luckily, I got enough food for them last month, but their bucket wasn’t for this month.

Fails: We had two buckets that made up most of our failures this month: MISC and Food. In the MISC category, we had to pay for the renewal of our passports for my child and me.

We also moved into our basement suite, and it came with restocking the pantry we were expecting but hadn’t budgeted for.

One thing I am proud of this month was that I could pay off my Feb expenses on my Credit card, i.e., groceries, gas, etc.

We struggled for a couple of months because we were also buying food for people who were not paying into it monthly.

I’m looking forward to March when we “Shouldn’t” have unexpected expenses and hopefully can keep our budget better.

Budget Report #6

It was great reading everyone else’s report.

We have fuel, groceries, allowances (husband & I), vehicle maintenance, extra (just in case), and a trailer(broke the yearly fee down to weekly).

My husband thinks that companies should provide health/dental benefits for their employees.

When he started at a previous job, it would cost us roughly $100 biweekly.

So, instead, I take out $200 a month and have created a benefits jar.

So whatever isn’t, I pay for that.

In Nov 2017, I decided that since we like to travel, I would start a TFSA and put money in there so we didn’t have credit card debt after we got home from the trip.

My husband started a new job a couple of weeks ago, so our earnings were down for the month.

Budget Report #7

February was exciting for us as We did a major role reversal.

I returned to work from maternity leave (5 months old), and my husband went on parental leave. I make more with shorter hours, so it just made sense.

We also were blessed with some gift money, which we put into some sinking funds and into our house Reno budget for our big March break Reno extravaganza.

I also pulled in more than I expected from my side hustle, which went straight into debt.

We overspent on groceries (I believe it was the struggle to return to work and not be organized), and we spent too much at Tim Hortons.

Again, back-to-work exhaustion and roll-up-the-rim season always get us.

Looking ahead to our March budget, we are doing an extensive renovation, so we hopefully have allotted for everything in that fund and not touch our extra savings.

Also, March break means a week unpaid for me and more fun things for the kids.

Welcome To Our Budget Challengers

That’s for this month. Check back at the beginning of April 2019 (sometimes in the middle) to see how we made out with our March  2019 budget.

Happy Budgeting CBB’ers!

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