More than 8,000 people in Flint have been told they could lose both their water supply and even their homes, if they continue to refuse to pay bills for polluted water provided by the Michigan city.

The residents have been sent water shutoff notices and threats that the city will take financial possession of their homes until they pay their water bills — or forever if they cannot make payments on looming deadlines. The city says the threat of taking financial control of property, known as a tax lien, is necessary because it is not bringing in enough money from its water utility. But that very same government, which serves one of the nation’s poorest cities, is still pumping dirty water through the tap after receiving close scrutiny for having dangerously high levels of lead in their drinking water.

Melissa Mays, a mother and Flint resident who started the advocacy group Water You Fighting For, said that when she began seeing water shutoff notices months ago, she and her husband determined that they would simply let the utility shut off their water and they would begin living solely on bottled water.

Her family has already stopped doing laundry at home, cooking with tap water, and has begun limiting their showers to seven minutes because the water is so toxic. They still don't drink the water because the filters grow bacteria, she said.

She is now scrambling to pay an $891 bill by May 19 and will have to miss house and car payments to keep their home.

Some of her neighbours have simply decided they'll have to walk away from their homes. Others don't know what they're going to do. Ms Mays said there's a sense of panic in Flint.

Sanders talks Flint water crisis during Michigan rally

City officials say that they have no choice but to take the strong measures. The state of Michigan stopped subsidising Flint's water in March after the state Department of Environmental Quality found Flint's lead levels tested within federal limits. That subsidy paid $40m to pay for roughly two-thirds of the residents' water bills.

"We have to have revenue coming in, so we can't give people revenue, I mean excuse me, give people water at the tap and not get revenue coming in to pay those bills," Al Mooney, a representative with the city's Treasury Department, told a NBC.

In pictures: Flint water crisis Show all 10 1 /10 In pictures: Flint water crisis In pictures: Flint water crisis Anthony Fordham picks up bottled water from the Food Bank of Eastern Michigan to deliver to a school after elevated lead levels were found in the city's water in Flint Reuters In pictures: Flint water crisis Michigan National Guard Staff Sergeant William Phillips (L) assists a Flint resident with bottled water at a fire station in Flint Reuters In pictures: Flint water crisis Flint residents Arthur Woodson, left, and Tony Palladino Jr. protest the arrival of Flint native and filmmaker Michael Moore as Moore accuses Gov.Rick Snyder of poisoning Flint water during a rally outside of city hall in Flint AP In pictures: Flint water crisis Flint residents pick up bottled water and water filters at a fire station in Flint. Michigan National Guard members were set to arrive in Flint to join door-to-door efforts to distribute bottled water and other supplies to residents coping with the city's crisis over lead-contaminated drinking water Reuters In pictures: Flint water crisis Soldiers from the Michigan Army National Guard Flint prepare to give Flint residents bottled water at a fire station in Flint Getty Images In pictures: Flint water crisis Justin Roberson (L), age 6, of Flint, Michigan and Mychal Adams, age 1, of Flint wait on a stack of bottled water at a rally where the Rev. Jesse Jackson was speaking about about the water crises at the Heavenly Host Baptist Church in Flint Getty Images In pictures: Flint water crisis A man sits next to a stack of bottled water at the Heavenly Host Baptist Church in Flint 2016 Getty Images In pictures: Flint water crisis The top of a water tower is seen at the Flint Water Plant. President Barack Obama declared a state of emergency in Michigan and ordered federal aid to be used to help state and local response efforts to an area affected by contaminated water Reuters In pictures: Flint water crisis Rosie Wright, center, rallies with the crowd over Flint's water crisis in Ann Arbor, Michigan AP In pictures: Flint water crisis Rick Catherman participates in a rally around Flint's water crisis in Ann Arbor, Michigan AP

The City of Flint made national headlines in 2015 after testing showed elevated levels of lead in the city’s drinking water. The water had seen a spike in lead levels after staff in charge of switching the city’s water supply from the Detroit Water and Sewerage Department to a different provider to save money failed to follow proper anti-corrosion protocol.

Because the water wasn't treated properly, ageing service lines leading to homes in the city began to release lead. Soon after the switch, Flint residents began complaining about the smell and colour of the water coming out of their taps.