Home » Guides » How to Pay Off Debt With No Money

How do you pay off debts and become debt-free if you cannot afford a takeaway meal or a cup of coffee at the local diner? Can you pay off debt with no money? Let’s look at some of the options that you can consider.


Do Nothing

This might be called the ‘ostrich approach.’ Stick your head in the sand and hope that everything will ignore you and pass you by. So, don’t pay any of your debts, ignore your creditors and tell yourself: "What can they do? I have no money."

1Wait for Debt Collection. When the creditors will sell off your debt to another company for a fraction of the amount owed, the debt collection agency will start again. Letters, emails, phone calls, visits, asking you to at least pay the lesser amount owed. If you continue to ignore them, that company will sell off the debt and… you get the idea. Don’t bother to check your credit score.

2Go to Court. This action by your creditor will depend on the size of the debt. They have a right to take you to court and get a judgment against you. That may mean garnishing your wages after the court has determined your ability to repay a certain amount. With the time it takes you to court and the costs involved, the creditor will undoubtedly think twice, but not necessarily quit the idea altogether.

3Debt Settlement. If you opt to negotiate with your creditors to pay a lesser amount, and it’s acceptable to them, then you are paying off the debt with money. So, strictly speaking, you are spending a dime you cannot afford. More than that, it will seriously impact your credit history, so we encourage you to think twice before deciding for debt settlement.

4Bankruptcy. Bankruptcy is always the least preferred option because of how it affects your credit rating for such a long time (7 years). But a court may rule to seize your assets, and they may also order that you can afford to pay something on a regular basis, mainly if you have a steady job. You will still be paying something.

In answer to the question of can you get away with paying absolutely nothing, the answer is no. Unless of course, you do something illegal like changing your name and move to a different state or country.


Do Something - The Slow Road to Debt Freedom

Let’s consider your financial situation is the same as we have described above, but this time you want to do something about becoming debt free. The first thing to admit it: You need help!.

Warning! Your inability to pay your debts means you are in no mental or mathematical shape to know why or how to make changes.

See a Financial Counsellor

This can be a free consult, or you will find government-sponsored help to give you advice on how to change things around financially. Take full advantage of credit counseling. They have been doing it for years and will have met people who were in worse shape than you. It’s time to swallow your pride and ask for some good advice and help.

Formulate a Plan

There’s that old saying: "If you fail to plan, then you plan to fail." Here are a few suggestions of existing instruments aimed at helping you get rid of debt:

1Refinance your Debt. This means taking out another loan to pay off existing loans. You can bundle credit card debt, your car loan, maybe a store loan or two and a personal loan into one big, single loan. Done correctly it will probably have a lower interest rate as well. Do the maths and see how much better off you will be with a single payment to worry about.

2Settle Your Debt. This was addressed earlier and may not be the best option. However, an honest negotiating company can lower your overall debt with your creditors and leave you with something a lot more manageable.

Prioritize Your Loans

In case you have many loans, start with your smallest one and pay that off. The extra money then goes towards the next debt in line. Keep doing that, and you will have additional funds at the end of each debt payout to pay off the last of your debts. You can do this starting with the smallest loan, as you get to see quick results, so it’s a motivator. Or you can attack the biggest one first. It will take longer for the result, but the relief will be enormous. You will then know you have the power to be debt free very quickly.

Live Within Your Means

This is the golden secret of living debt free. We say it’s a secret because very few people seem to know about it. Never spend more than you earn. That’s as basic as we can make it. That means you can save, you can manage debt, and you will live a life of being stress-free.


Can You Do It?

What are your alternatives? Continue as you are into an early grave and seriously poor, or find some motivation, some purpose to at least try and dig yourself out of the hole in which you find yourself. Of course, you can do it!


Financial Literacy Incentives
Financial Literacy is your own responsibility that needs to be taken care of with each decision impacting money matters. We strongly recommend you to benefit from each occasion that arises intended at helping you build your financial knowledge.