The Secrets of How to Get Out of Debt Fast With No Money

Ian Lewis[1]

Ian Lewis

Money Savings Advice How to get out of debt with no money

If you’re struggling with debts and have minimal funds available, there are still ways and means of reducing your debt. This may involve changing your lifestyle, downsizing your home or disposing of some assets, but it is not the end of the world.

What Is a Debt Relief Order?

If you have no spare money to pay your debts, a Debt Relief Order can get you out of debt in 12 months. If you have some money then you might not be eligible, but an IVA could reduce your debts.

There are numerous ways in which you can reduce your debts even with no funds available. The actions that you take will depend upon the level of the outstanding debts and your financial outlook in the short, medium and longer-term.

So, keep reading and get all the details.

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Should I Approach My Creditors?

As soon as you foresee problems in maintaining debt repayments, it is advisable to contact your creditors and make them aware of your changing financial situation. Creditors will appreciate early warning of potential problems because they can try to help you plan ahead. The earlier you address your financial concerns, the more options available to you.

Would My Creditors Give Me a Repayment Holiday?

If you approach your creditors early enough, there may be an opportunity to arrange a short-term repayment holiday in order for you to get back on your feet. You would likely need to provide a detailed plan of attack so that your creditors can see your current situation, changes going forward and an eventual return to your normal repayment schedule.

Should I Look at a Debt Management Plan?

Debt management plans are an informal/formal arrangement between yourself and your creditors as a means of repaying unsecured debts. This will include unsecured debts such as credit cards, store cards, personal loans, etc.

The idea is simple; you work out exactly what you can afford to pay your creditors on a monthly basis, make one payment per month which is split between each one on a pro-rata basis. If your financial situation improves then you would simply revert to the original repayment schedules; otherwise, your debts will be paid off over a longer period of time.

Do I Need to Sell Assets?

If you have surplus assets available which you can sell for a reasonable price, then this may help to alleviate short to medium-term financial pressures. For example, even though you may require a vehicle to get to and from work, there may be potential to downsize your vehicle to a cheaper model?

You need to find a balance between assets you need to live and work and those which are perhaps surplus to requirements.

Should I Release Equity From My Home?

If you are in debt and there is no likelihood of an increase in your short to medium-term cash flow, then it may be sensible to release equity in your home. This would obviously depend upon the level of equity available and the cost of releasing equity via, for example, a remortgage, equity mortgage, lifetime mortgage or a home reversion scheme.

There are pros and cons for each type of fundraising, and it is sensible to take financial advice before proceeding.

Can I Make Any Savings From My Monthly Budget?

If you are moving towards financial distress, then one of the first things you should look to do is review potential savings from your monthly budget. This may involve reducing your Sky TV subscription, cutting back on mobile phones, spending less on food where possible and perhaps reining in your social life.

Many of us have been forced to live a more frugal lifestyle as a consequence of the ever-growing cost of living, although hopefully, this won’t be forever.

Should I Look Towards a Debt Relief Order?

If you owe a maximum of £20,000, have no property or assets to sell and little spare income, you could look towards a debt relief order. This is a legal procedure whereby qualifying debts such as credit cards, hire purchase agreements, business debts, etc. are brought under one umbrella.

Under the arrangement, all debt repayments would be suspended for 12 months after which your situation will be reviewed. If there is no improvement in your financial situation, then the qualifying debts would be written off. If your situation had improved, then you would be expected to make contributions going forward.

Would an Individual Voluntary Arrangement Work for Me?

An Individual Voluntary Arrangement (IVAs) is a legally binding agreement between you and your creditors. They usually last five years, although can be extended in certain circumstances, during which time you would be expected to make payments where possible.

Working with an adviser, you would put together a budget and thereby identify surplus capital each month which can be paid towards your debts. This one monthly payment would be split between your creditors and the insolvency practitioner managing your IVA.

Assuming that you have managed to make all agreed repayments during the five year period then your debts will be written off and deemed non-recoverable by your creditors. Repayments during the IVA could be increased or reduced depending upon changes in your financial circumstances. In the event that you weren’t able to afford any repayments, then alternative arrangements may be considered, such as bankruptcy.

Should Bankruptcy Be a Last Resort?

While many people see bankruptcy as the “nuclear option” for many, it offers a way in which they can start debt-free again. In order to qualify for bankruptcy, you need to be insolvent, which means you are unable to repay your debts.

Bankruptcy normally lasts one year, after which time you would be “discharged” and all of your qualifying debts written off. There would obviously be a significant impact on your credit rating, as there would with any type of debt arrangement, but for many people, bankruptcy offers the opportunity to start debt-free again.

Is It Ever Too Late to Tackle My Debt Problems?

In truth, the sooner you address your financial problems, the more options available and the more chance of your creditors offering assistance. The longer you leave it, the fewer options available to you and the greater the impact on your credit rating. If you foresee any financial difficulties going forward, it is never too soon to take advice.


There are ways and means of addressing your debt problems with little or no surplus capital available. Simple tweaks such as repayment holidays can give you the opportunity to get yourself back on your feet. At the other end of the scale, where your situation is irrecoverable, then bankruptcy may be the best option allowing you to emerge debt free after 12 months.

How Can Money Savings Advice Help You Reducing Your Debt?

Here at Money Savings Advice, we have partnered with some of the UK’s debt release brokers. They have already helped thousands of people reduce and remove a high percentage of debt, and if you are struggling with debt, they can do the same for you.

Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.

If you would like to speak to one of these brokers, then click on the below and answer the very simple questions.


Money Savings Advice Author Ian Lewis

Ian Lewis

Ian Lewis is one of our specialist financial writers. Ian has over 15 years of financial writing experience, having worked for some of the largest financial publications in the UK covering topics from mortgages, equity release, loans and financial claims, to name a few.

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