What to Do When You Can’t Pay Your Utility Bill

If you’ve ever shivered through a sub-zero morning in Maine or sweated out a summer afternoon in South Florida, you understand that a thermostat can be your home’s most valuable appliance.

But what happens if you can’t afford to use it?

Gas, fuel oil, electric and water bills are easily among the largest household expenses. Struggling to keep the power on or the oil tank full can be tough, especially if you’re going through hard times.

Fortunately, an assortment of government, charitable and utility company programs are available to make these expenses manageable. If you lost your job or had an emergency that makes paying a utility bill difficult or impossible, become familiar with help that’s available and start making calls.

What Are Utilities?

A utility is a basic service that makes your home function and makes it livable. They include essential services that heat and cool your home and power your appliances, as well as less essential ones that provide entertainment and comfort.

The most common are:

• Natural gas, electricity and fuel oil
• Water
• Trash removal and recycling
• Communications connections, (cable, internet, cellphone)

The average American spent $370 a month in 2022 on utilities – including electricity, natural gas, water, trash pickup, broadband and streaming. That number can vary, depending on where you live and what services are common in your location.  Electricity is the great equalizer across America, no matter how people heat or cool their homes. The average monthly electricity bill in the U.S. in 2020 was $117.46, with residents of Hawaii paying the most at $162.66. Residents of Utah had the average lowest monthly bill at $80.24.

No matter where you live, utility bills eat up a big part of a monthly budget, especially if your income doesn’t keep up with costs or you’ve lost your job.

Paying Your Utility Bills

Utilities are a need, not a luxury, and when you don’t have enough money to pay, it requires fast action.

If you’re having an immediate cash crunch, you should organize utilities by priority. Depending on the season, home heating or cooling may be essential. Electricity and water always are, and increasingly, so is internet.

But look at what may not be essential – including cable, phone and streaming services. Consider suspending cable for a while. If you have a landline and a cellphone, drop one of them.

If you are still having trouble paying your bills after making changes, you should contact the utility provider to let them know. In many northern states, it’s illegal for a utility company to cut off electricity in the winter, but that doesn’t mean you won’t have to pay the bill at some point. Find out how you and the utility company can work together to make sure you’re safe and warm.

How to Pay Off Old Utility Bills

Unpaid utility bills won’t go away and will add to future financial difficulties. To pay off old utility bills:

• Look into utility assistance from the state and local government agencies or church charities
• Call the utility provider and see if you can negotiate a payment plan
• See if you qualify for a personal loan
• Review your budget and see if you can make cuts in other places in order to prioritize the bills

What Happens if You Don’t Pay Your Utility Bills

Not paying utility bills has both immediate and long-term negative consequences, including:

• The utility being shut off: While it’s against the law to turn off electricity or heat during the winter in many states, for the most part, if you don’t pay, you lose the service until you pay. In most states, a water company can shut off service with 10 days notice.
• Calls from collection agencies: Utility bills that go unpaid for more than a month or two can be sent to collection agencies, which means constant phone calls, the possibility of court action and a hit to your credit score.
• Impact on future utility access: If you don’t pay an oil or propane company, or other utility provider, you may find the service more expensive in the future, or even find you can’t get an account without a co-signer.
• Negative impact on credit score: While utilities don’t report on-time payments to the credit reporting agencies, once a bill goes to collections, that goes on your credit report. Even if you eventually pay the bill, the collections account will stay on your credit report for seven years, though it will have less of an impact on your credit score than an unpaid one.

Government Programs for Help with Electric Bills

If you know you won’t be able to pay a utility bill, start looking for help ASAP. Government programs and charities can assist, but you have to learn what’s available and ask for it.

The top utility assistance program for electric bills and other utilities that provide heating and cooling is the Low Income Home Energy Assistance Program (LIHEAP). Administered by the federal Department of Health and Human Services, it provides states with money to help those in financial need, pay their energy bills.

The program was set to allocate a record $8.3 billion in 2022, which included funding from the regular budgetary process for the 2022-23 fiscal year. The program will receive add-ons as part of the Infrastructure Investment and Jobs Act of January 2022, with an additional $100 million each year through 2025. The money aids residents in all 50 states, administered through state human services departments.

LIHEAP is used to help offset heating and cooling bills, so if you heat with gas, that’s what you get assistance with, and the program won’t help with your electric bill.

LIHEAP money is also available for weatherization and energy-related minor home repairs.

Qualification for Energy Assistance Programs

There are income thresholds to qualify for help from LIHEAP based on a formula using the national poverty level. Though eligibility varies from state to state, a single-person household cannot earn more than $20,385 a year. The amount of income increases exponentially with household size, between around $6,000 and $7,000 per household member.

If you already have qualified for benefit programs like Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI) or needs-tested VA benefits, you might automatically qualify for LIHEAP.

LIHEAP also has a priority system that favors households with a family member at risk or disabled and those households with elderly members.

LIHEAP money is limited – each local office receives a set amount of funding each year and when the money runs out, no more benefits are available until Congress makes them available the following year. Traditionally, only about 20% of households nationally that qualify for help under the program guidelines received assistance, but the added money in 2022, continued added assistance for the next five years and new programs and outreach is expected to reach hundreds of thousands more Americans who need utility assistance.

In addition to LIHEAP, some states have their own utility assistance programs. Ohio, Colorado, New Jersey, Nevada, Illinois, Pennsylvania, New Hampshire and Maine all have programs that subsidize utility bill payments based on income levels.

How to Get Help with Your Gas Bill

If gas is your primary heating source, LIHEAP benefits can assist you with bills. Gas companies also run assistance programs using LIHEAP money, so if you can’t pay your gas bill, the best thing to do is contact your gas provider.

State housing authorities also have programs that can help with heating bills, and many states also have utility assistance programs separate from those offered through federal aid.

How to Get Help Paying Your Water Bill

The Low Income Household Water Assistance Program (LIHWAP) is to water bills what LIHEAP is to energy bills. LIHWAP provides money to low-income households to help pay water bills as well as sewage bills, recognizing that access to safe drinking water and wastewater disposal is essential for public health.

The program is new – it was created by the Consolidated Appropriations Act of 2021 (CAAct) and expanded by the American Rescue Plan Act of 2021. It allocated $1.1 billion in its first funding round to all 50 states, as well as tribal governments and territories, which then would establish programs to provide assistance to residents. The program is temporary, scheduled to end Dec. 31, 2023.

To qualify for water bill assistance, the applicant must meet the same income levels as those applying for LIHEAP do, as well as spend more than 30% of their monthly income on housing. Up to 3% of the appropriation must be directed to tribes and tribal organizations.

The LIHWAP website has contact information for every state and territory, as well as tribal government.

Many states as well as water utilities also have programs, separate from LIHWAP, that may help those who need assistance pay their water bills. Check your state’s human services website.

How to Get Help Paying for Phone Services

A phone is not a luxury for most people, but a necessity. If you need a phone, but can’t pay your phone bill, the Federal Communications Commission Lifeline Assistance program, administered through Assurance Wireless and Safelink Wireless, may help. They are available in Washington, D.C. and every state except Montana. Each state has its own criteria – most requiring you to be in another assistance program like SNAP, TANF, LIHEAP, etc. – but all provide cellphones and service for low-income residents who couldn’t otherwise afford one.

The Lifeline Assistance program also works through cellphone and other utility providers to help adjust contracts and service if the customer has lost their job or has some other financial setback. Contact your service provider if you can no longer pay your bills to see if you qualify.

Another option is to seek cheaper phone service that would cover the penalty for breaking your contract with the provider you have now. Many phone services offer this as an incentive to get customers.

Charities and Churches Offering Help with Utility Bills

Charities are also available to those facing a bill-paying crisis. You can often find these agencies by dialing 2-1-1 on your phone and connecting to an emergency assistance operator.

Organizations that can help include the Red Cross, Salvation Army, Catholic Charities, Lutheran Social Ministry, St. Vincent de Paul Society, the Jewish Federation of North America, the United Way and the Urban League.

Most of the organizations help is at the local level, though the Red Cross has some financial aid available when it responds to national disasters. The other organizations operate in communities with varying budgets and priorities. It is best to show up with your utility bill in hand and any evidence that can support your plea for assistance.

Local churches also often offer help. If you need help with your bills, call churches in your area and ask if they provide aid to keep your utilities on. Many do not require you to be a member of their congregation to get help.

Many communities also have general assistance programs through the local government that provide cash that doesn’t have to be paid back from proven emergencies, including those involving utilities. Check your city or town’s website to see if general assistance is offered.

Utility Provider Assistance Programs

The companies that provide utilities throughout America recognize how disruption of their service can cause chaos in the day-to-day life in a home, so they also provide assistance for financially strapped families.

American Water, one of the nation’s largest water companies, operates the H2O Help to Others program that can pay part or all the water bill of a qualified low-income applicant. The H2O program focuses on the elderly and handicapped.

Heating, cooling and electric bills are often the most expensive, and many utility companies have their own programs and financial aid.

The assistance can come in the form of:

• Direct financial assistance to pay a bill
• A payment plan to spread the bill over months and make repayment less of a hardship
• Referrals to other agencies in the area that assist with utility bills
• Help on weatherizing a home to make it more energy efficient

To find out what type of assistance programs are available in your area, contact your utility provider’s customer service department.

How to Find Energy Assistance Programs in Your Area

The best place to find out how you can get utility assistance in your area is through the U.S. Department of Housing and Urban Development. HUD has a webpage that has links to all the state’s assistance pages.

The website of your utility provider, particularly if you need assistance paying energy bills, will also likely have information.

Getting Your Utility Services Turned Back On if They were Shut Off

If your utility was turned off, getting your service turned back on is essential. Service providers would rather help than leave you in the cold, so contact your service provider as soon as possible to find out what you can do. Government agencies and charities also recognize how essential electric, energy and water service is, so there are many avenues to get help, including:

• Find out if you qualify for LIHEAP.
• TANF – Temporary Assistance of Needy Families – can provide money to those who qualify to get utilities turned back on.
• See if your state, city or town has emergency assistance.
• If you rent, contact your state housing agency or authority.
• Contact your state legal aid or assistance office if you feel your utilities have been wrongly turned off, particularly if it’s between November and April.
• Seek our charities and nonprofits that offer emergency aid.
• If you are a veteran, contact your local VA office.

Tips on How to Save Money on Utilities

There are ways to save money on utilities, some that you may already know about and others that may not be so obvious. All of these may not apply to you, and some cost money on the front end in order to save in the long run, but some may help you cut expenses and lower utility bills:

• Have your furnace regularly cleaned and maintained.
• Change filters on air conditioning ducts.
• Lower the thermostat in the winter.
• Lower the thermostat on the water heater.
• Raise the setting on the air conditioner, and consider not using it as often.
• Fix leaky faucets.
• Take shorter showers, which can lower both the water bill and the energy bill.
• If you have a dishwasher, use it – they use less water and heat than washing by hand for an equivalent load.
• Dry your laundry outdoors on a line rather than using a dryer.
• Unplug appliances, chargers and other electricity vampires that aren’t in use.
• Weatherize, including sealing drafty doors and windows – many power and energy companies offer free energy audits that can show where heat is leaking out if you live in a cold climate, and leaking in if you live in a hot one.
• Add insulation.
• Buy a smart thermostat that automatically adjusts the temperature at night or when you go to work.
• Close heating and cooling vents in rooms you seldom use.
• Check your state for programs that encourage conservation and weatherization – many new ones were established with the Infrastructure Investment and Jobs Act of 2022.
• If you live in a northern state, check your state government’s energy office to see if they offer incentives to change from oil or gas heat to a heat pump – some states even offer low-interest and no-interest loans on purchase and installment.
• Review your cellphone bill and see if you can get along with a cheaper plan that offers fewer bells and whistles.
• When you get new appliances, make sure they are energy star.

Get Help Exploring Your Options for Utility Assistance

If you are having trouble paying utility bills, it may benefit you to talk to a counselor at a nonprofit credit counseling agency. Nonprofit credit counselors will review your expenses and budget and help you find ways to save money. And it’s FREE! They also may recommend ways to reduce your debt, including a debt management plan, debt settlement, or other debt-relief options. Since the agencies are nonprofit, the counselors are required by law to give you advice that’s in your best interest – not sell you products. Talking to a counselor at a nonprofit credit counseling agency can help not only with finding ways for you to pay your utility bills, but to strengthen your finances in general.