What to Do If You Can’t Pay Rent

The rent is due on the first, and there’s no way you can pay it. It doesn’t look like you can pay it for a while, either, unless you start skipping out on food. You’re at a point where some tough decisions are going to be made. What do you do?

It’s a frightening situation to be in. While I’ve never been in a truly desperate situation, Sarah and I in our earlier years faced a period where we struggled mightily to pay the rent and found ourselves late a couple of times. We found that having a plan, knowing our rights and talking openly to our landlord made all of the difference in the world.

Let’s start at the beginning.

1. Know your lease — and your rights.

The first thing you should do is dig out a copy of the lease you signed and find out what exactly it states regarding late payments. What are the penalties listed for late payment? What are the guidelines for eviction in your lease?

You should also make sure you’re aware of what your rights are as a tenant in your area. This list of state-by-state resources from the Department of Housing and Urban Development is a great place to start, as it will point you right toward what you need to know about the rules and laws in your state. During the current economic downturn, many cities and states have enacted temporary eviction moratoriums and rent freezes, which means that your landlord may not be able to evict you.

You may want to also look at current housing rules in your city, as some cities are offering rent assistance and other means to help renters during the current economic difficulties.

Together, these resources should give you a clear expectation of what your rights are and what the landlord can legally do if you are late on your rent.

2. Talk to your landlord.

Once you’re equipped with that information, have a conversation with your landlord. Make it clear that you are struggling to pay rent right now and discuss what kind of arrangement you can work out together so that you’re not evicted and that your landlord doesn’t have an empty apartment to try to fill.

The truth is that, in most situations, the landlord doesn’t want to evict you, particularly if you have been faithful in your rent payments and a good tenant up to this point. There are costs for your landlord in filling that apartment or house, and there’s a risk that any new tenant might be a far worse tenant than you. Plus, during trying economic times, every landlord in the world recognizes that many renters are going to have problems paying rent, and new renters that replace them may very well have those same problems.

All of that adds up to a simple truth: your landlord is probably going to want to work with you unless you have a bad track record of paying rent or other difficulties as a tenant.

Open up that conversation. Contact your landlord and simply state that you’re going to find it very difficult to make the rent this month or for the next few months until your employment situation stabilizes. Ask if there’s anything you can do to make this work for the time being.

Do this sooner rather than later. As soon as you recognize that you may have a real problem covering rent — or when you stumble upon this article — talk to your landlord quickly. Don’t wait until you’ve missed rent, because that means you’ve compounded the problem for your landlord. The more time you give your landlord to plan, the more likely it is that you can come up with something that works for both of you.

Remember, your landlord likely has concerns, too, particularly if your landlord is an individual or a small company. Likely, that individual or small company has a mortgage on the property you live in, so someone missing rent may mean that they struggle to pay the mortgage. This isn’t your concern as a renter, but it does help to understand that your struggles can also mean their struggles, and working together is often the best solution for both of you.

When we struggled with making the rent before, we found that simply having this conversation helped a ton. It helped the landlord to see that we were people trying to make things work rather than people trying to rip the landlord off. We weren’t being sneaky, we were real people who were really struggling.

3. Know what you can afford — and have a plan.

When you have this conversation with your landlord, you should have a plan in mind. What is the outcome you’re hoping to achieve from this, beyond merely staying in your home during this tough time? Are you merely hoping to stave off eviction for a little while? Are you aiming to continue to live here for a while and hope to come to an arrangement that won’t result in eviction? Figure out what the desired outcome of your conversation is before you even start.

If you’re aiming to stay put, one thing you can do is to consider what you can afford for rent right now and suggest that as a temporary rate. For example, if your rent is normally $700 per month and you can only afford $350 while keeping food on the table, suggest that amount. Ask if you can have a temporary rent reduction to $350 a month for the next three months or until you get back to regular work. This won’t necessarily be the plan that your landlord proposes, but it will give your landlord food for thought.

Another thing you can do, particularly if you’re currently unemployed, is ask if there are tasks you can do to help make up the difference. Can you take over the mowing? Can you do some mowing for other properties? Are there tasks you can do inside the property, like repainting? Those things will save the landlord money or improve the future value of the property while keeping you in your apartment or home while money is tight.

The point is this: having a plan in place gives you a clear starting point in conversations with your landlord. Without that, your landlord is just going to guess what your situation is and guess what you can offer and will potentially suggest something that just won’t work.

In our situation, it was mostly about being late with the rent rather than being completely unable to pay. We were very clear about our situation and asked if we could pay half of the rent immediately and the other half on the 15th of the month. We asked this in advance of our rent being due and, in each case, the landlord said, “Absolutely, and thanks for telling me in advance.”

4. Think about your next steps.

Although these steps may help you stay in your current apartment for a while longer, it is a good idea to start thinking about your next steps if you find yourself struggling to pay the rent in the future or unable to meet the terms of your revised arrangement with your landlord.

It should be obvious, but you should be aiming your efforts on getting yourself into a stronger financial state. Perhaps this means getting a new job or getting a second job. It may mean selling some of your possessions or finding quick side gigs to earn money. You may want to start talking to your friends about whether they have any inroads that will help you get a better employment situation.

Similarly, consider where you might live if you can’t continue to afford where you live now. Is there someone you can move in with? Are there cheaper housing options in your area? Start evaluating those things so that you’re not struggling mightily if you are unable to stay where you currently live and need to live elsewhere. It’s better to consider options now when you have some time than to do it in a panic when you’re getting evicted.

5. Be proactive.

The worst thing you can do is sit around, skip your rent payment, don’t talk to anyone about it and not consider any plans for the future. That is the worst plan you can follow.

Instead, take action. Find out what your rights are. Find out what your lease says. Figure out what kind of compromise with your landlord works best for you. Contact your landlord quickly and have a real conversation about your situation. Suggest a compromise. Look for ways to earn more money or bring in some short term cash. Look for other housing opportunities.

Don’t sit around and wait for bad things to happen. Step up, take charge, and make some better outcomes for yourself.

Good luck!

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.