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How To Get Out of Debt With No Money

how to become debt free on a low income one hand pulling out an empty pants pocket with the other hand holding a small amount of change Middle Class Dad

Being cash-strapped and cramped for financial freedom isn’t the way you want to live. Even if you are broke, there are ways to dig your way out of the crisis. Well, you might be clueless about how to manage your debt and regain your monetary freedom when you feel cornered. Established consultants at financial institutions can counsel you and recommend the most suitable strategy to bail you out of trouble.

The secret to getting out of debt with little or no money is to monetize your existing assets and manage your expenses intelligibly. In this article, we have discussed some instruments to get out of debt. This article has put together recommended practices that will help you manage your funds with ease. If you are looking for debt consolidation services in Red Deer or the surrounding areas, visit this website.

5 strategies to settle your debts when you are broke

Although we have recommended five powerful instruments under this section, your financial health largely determines the process you should undertake.

1. Bankruptcy

This is a process where you can take legal measures to prove that you are broke. This way, you can stop creditors from bothering you. Under this mechanism, you need to declare before the law that you would not be able to pay the dues to your lenders.

Of course, bankruptcy should be the last option since the process involves the loss of reputation. Even when you are low on finances, it is necessary to pay a legal charge to file the process of bankruptcy. Under these conditions, it would be necessary to reach out to a bankruptcy insolvency trustee.

When you file for bankruptcy, you will lose all your cards and assets. Also, your credit score can also take a blow, and the red marks would make it look ugly for seven years.

2. Credit counseling

Credit counseling is a highly effective instrument for settling debts. Here, you need to work with financial experts for viable strategies that would help you financially. Once you reach out to a credit counseling expert, the professional will help you create a financial plan. When you stick to it and work on your saving habits, you can be debt-free in a few years.

 3. Consumer proposal

The concept of consumer proposals is relatively new. The Canadian government has come up with this provision to help its citizens become debt-free. A consumer proposal is a legally binding agreement and must be facilitated by a bankruptcy and insolvency trustee. As per the agreed deal, you have to pay a part of your debt. The government, in return, bails you out of debt through forgiveness.

A consumer proposal is different from bankruptcy as you won’t lose your assets. Neither would you have to surrender your cards. However, this process would also affect your credit score. Once you go through this process, you will have the provision of making interest-free repayments for the next five years.

4. Debt settlement

Debt settlement happens to be one of the few methods where you won’t lose your respect or credit score. Under this mechanism, you need to shell out a sizable amount after getting into a deal with your creditors. This amount wouldn’t be as high as the total dues you need to pay.

However, why would your creditors agree to settle for a lower amount? You need to work with an established debt settlement firm to negotiate with the lenders. Apart from this, you also need to factor in the consultation fee for the professionals.

5. Debt consolidation

Debt consolidation is the best way to dig your way out of all the liabilities. Here, you can retain your assets, and the overall process would be less expensive. However, a healthy credit score would be necessary to help you in the process.

In case you have several loans like personal loans, credit card loans, payday loans, or even liabilities to individuals, the professionals will help you obtain a lump sum amount by utilizing your home equity or processing a personal loan.

This way, you can combine all the smaller loans into a single account, paying them off simultaneously. In the end, you would owe only a single amount to the bank, and that too, at a lower interest rate. The process would eliminate your stress, as you need not remember several payment dates throughout the calendar.

How to save more while repaying your debts

Now that we have discussed five viable means to get out of debt, here are some more tips on making more savings. When you curtail your expenses, you can channel the funds to repay your debts faster.

  • Although you might find it challenging to adapt to the new financial habits, cut down on non-essential purchases. Refrain from purchasing things impulsively, and try not to use your cards. Eating out with friends or spending time in the coffee shop builds up your expenses over the months.
  • Explore different online and offline stores for shopping grocery and other items. Compare the prices and best deals. Also, hunt for reward clubs, free deals, and lucrative discounts.
  • If necessary, suspend your OTT and streaming subscriptions for a few months. When you prioritize your financial freedom, you need to make a compromise.
  • Manage your rental cost with expertise. Try adding a roommate in case you have extra space and split the cost.
  • Chalk out a monthly budget for all your expenses. At the month-end, track your expenses and check where you missed the line. This way, you can control unnecessary costs.


Managing your finances turns out to be a challenging pursuit. Particularly, when you are in debt, you might run out of ideas. Refrain from making harsh financial decisions without consulting advisement experts, as the process might backfire.

For instance, if your credit score fails to qualify you for a debt consolidation loan, your score might dip further. In the first place, make sure to take the advice of financial experts on your side. Once you have experienced minds to guide you through your financial journey, you won’t have the danger behind your neck. Being strategic and organized with your financial habits, you can be debt-free a few years from now.



Jeff Campbell