How to get debt-free with no money?
Digging out a way to pay the debts when you can barely make ends meet is challenging. You know you are just one repair expense away from a financial disaster. Such circumstances affect one’s ability to explore the possibilities to tackle dues.
What if you can no longer pay debts? It may enter default, and the creditor may impose a court order against it. In some cases, the non-repayment may lead to losing some assets to the creditor. How would you deal with this? The blog lists the possibilities to get debt-free with no money.
If I cannot pay my debt, what options do I have?
If you struggle or cannot pay your debts in the UK, you have multiple options. Identify the options that you have not tapped yet. For example, you may have forgotten to check the dividends that you own. It is a small passive income that you earn from investments. If not whole, dividends may help you pay at least the small debts.
Similarly, check the other potential sources like- selling the old stuff and earning some money, earning money from equity in your home, etc., Yes, you can rent a part of your home or sell some to get money against. It may help you pay the bills. However, it should be the last resort. Here are other things to get debt-free with no money:
1. Grab payday loans for small debts
Don’t fear the word “loan” here. It is the way to get out of debt quickly. You can get a payday loan to clear small debts like overdrafts, text loans or credit card debt. It just requires you to have a basic income. Part-time or full-time earners may get a small amount up to £1500.
Splitting the payments into long instalments reduces the monthly payment. You can also get 12 month payday loans to pay the loan comfortably. The payments stay fixed for the loan term. Moreover, if you struggle financially, you can halt payments or reschedule one. It helps you achieve your goal without affecting the basic financial structure or budget.
| Payday loans amount (in pounds) | Monthly payment (in pounds) | Repayment term | Interest | Total repayment amount (in pounds) |
| 700 | 81.38 | 10 months | 34.5% (annual) | 813.93 |
| 400 | 46.46 | 10 months | 34.5% (annual) | 465 |
| 300 | 34.88 | 10 months | 34.5% (annual) | 348.80 |
2. Check government schemes
Yes, you may find the best government schemes to clear your debt in the UK. For example, you may turn to DRO ( Debt Relief Order), DMP (Debt payment plans and Individual Voluntary Arrangements (IVA). Here is the detailed description of each:
a). Debt Relief Order ( DRO)
A Debt Relief Order helps individuals struggling to clear debts. It restricts the creditors from contacting the borrower for dues for 12 months. After 12 months, you don’t need to pay these debts anymore. The DRO stays on the report for 6 years from the date it was approved. However, you may qualify only if you have no way to pay it and owe less than £50000 in total dues.
b) Debt Repayment Plan ( DMP)
Debt Repayment Plans are designed for people with low income and few assets. Individuals owing less than £50000 and limited assets accounting for £2000. Apart from that, you must have income only covering essential expenses. It helps you get a plan according to which you must make payments. The debt repayment organisation discusses the debt or negotiates on your behalf.
c) Individual Voluntary Arrangement ( IVA)
It is a legally binding agreement between individuals and creditors. The contract lists the debts, the amount and the repayment term by which you must pay the dues. It helps individuals control their assets from seizure. Otherwise, non-recovery may lead to bankruptcy. Here in an insolvency practitioner distributes money to the creditor on the person’s behalf.
3) Identify the insurance maturity dates
One of the best ways to tackle the debts is through the insurance money. However, one must save some for the particular purpose for which you applied for the insurance. In life insurance, you may use the money for life-related purposes. Therefore, check the maturity and redeem the money. Most individuals forget such investments because the maturity period is long. It may help you clear some debts in no time.
4) Determine if you can skip some expenses
Yes, optimising the budget may also help you save money. For example, you may have ignored certain aspects, leading to unnecessary expenses. Here are some of those expenses:
- The old cable connection is still connected with direct debit
- OTTS with auto-pay that you hardly use
- Grocery application subscription
- Previous council tax agreement
Thus, check subscriptions and expenses for which you have set auto debit. Chances are, you may be paying off some of these still. Cancelling and removing such a subscription may help you save some money. Thus, it is about creating a money plan when you go cashless.
5) Seek housing relief to save money on rent
Individuals having less than £16000 in savings or on Pension Credit may get Housing Benefit. It helps you cover the rental costs. You don’t need to pay the rent if you meet the conditions. Thus, downsizing or seeking such options may help you save money for debt clearance.
You can instead save money to clear the pending rent and other payments. If you are just £1000 low on clearing the rental debt, do it now. You may get a £1000 loan to bridge the dues. It helps you clear the dues and plan for other expenses carefully.
6) Identify your emergency fund savings
Do you have an emergency fund for crucial times? Although it is specifically for critical life phases like unemployment, you can tap it under extreme situations. For example, if you believe that you may enter bankruptcy if you don’t pay the dues, check whether the funds may cover it for you. If not, then there is no use in tapping the carefully managed savings.
Moreover, there are certain limitations to tapping it for your use. Therefore, analyse the guidelines and check the impact of frequent withdrawals on emergency funds. It will help you decide right for your needs.
Bottom line
If you want to get debt-free with no money, the above-listed tips may help. Identify how much you can manage within the current circumstances. Check the possibilities to increase savings. Besides that, identify schemes that may help you with financial relief. It increases the possibility of saving money for debt clearance. For example, debt relief orders and a debt management plan may be the solution to your problem.
Ailsa Adam is the Editor-in-Chief and former content head at Hugeloanlender. She has been a valuable member of the content strategy team since 2017 due to her abundant experience in the finance sector. Passionate about helping individuals navigate the world of loans and personal finance, she has dedicated herself to acquiring extensive knowledge on various financial products. Before her role at Hugeloanlender,
Ailsa worked as a seasoned journalist and writer, specialising in creating informative blogs and articles on diverse loan types. She is known for her meticulous research and commitment to delivering accurate and engaging content. She holds a degree in MBA Finance and has a keen interest in creative writing and art.
