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How to Get out Of Debt with No Job – 2022 Guide

how to get out of debt with no job uk

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

When you don’t have a job, being in debt can feel a lot worse than it is.

If you’re facing a similar situation, keep reading!

I’ve compiled a guide on what you can do to get out of debt with no stable source of income.

Let’s get right into it.

Survival with No job 

Apply for Government Funds (Jobseeker’s Allowance & Universal Credit)

The first thing I recommend you do is to apply for State funds.

Depending on your financial situation, lots of charities and government avenues may have free grants and allowances for you.

If you don’t have a job, you can apply for Jobseeker’s Allowance as you’re trying to find a job.

The JSA amount has an upper limit, but the amount you get depends on your age, marital status, and financial position.

It’s paid twice a month, normally, and is deposited directly into your bank account or other accounts.

As for Universal Credit, it is a scheme that is replacing JSA as a benefit. It’s intended to help you be able to pay your living costs and afford basic utilities every month.

Fall Back on Your Savings

One of the best things you can do at this point is to fall back on your savings. 

If you have extra money lying around, now is a good time to use it for the monthly payment on your debt.

If you have to choose between saving money and using it to pay back your debt, I recommend that you utilize it and pay your debts.

This is because the longer you drag it on, the higher the total amount you’ll have to repay due to interest.

Look for Side Hustles

If you’re strapped for cash, you might want to consider trying to generate multiple income streams besides your regular day job.

You should definitely try to earn from your skills.

If you can write, proofread, code, or are well-versed in a number of other skills, freelancing could be a very good option for you to earn money on the side.

Remember that your main goal is to save up as much money as you can, as quickly as possible. 

Whether you want to work an extra shift at your job, do odd jobs for quick cash, freelance, or find some other way to earn money, it’s going to considerably ease your burden.

I understand that when you don’t have a stable career path, things can get very frustrating. Just know that even if you have to lower your living standards for a while, it’ll be worth it once you go debt free.

Needs vs Wants – Watch Your Spending Habits & Let Go of Luxuries

Lots of people fall into the trap of disguising their wants as their needs and then overindulging to the point where credit card debt does a number on their living standards.

Remember that even occasional splurges with a credit card can cost you dearly in the long run. 

For one, credit cards have very high interest rates, and secondly, they fool you with the illusion that you have money when you actually don’t.

When you don’t have any employment, you should be looking to spend as conservatively as possible.

Spend only on basic utilities and things you need. 

No, you don’t need that brand new phone or the latest kitchen appliance. Pay your credit card debt off first and then you’ll be able to engage in luxuries.

Spending smartly can go a long way in making things considerably easier for you. So watch your spending habits and protect your credit score.

how to get out of debt with no job

How to Pay off Debt with No Job? – Possible Options

In this section, I’ll be talking about all the possible options you may avail of when looking to pay off your debt without a proper source of income.

  1. List Down All Your Debts

Avoidance is a commonly observed behaviour in a lot of debtors.

One of the best things you can do for yourself at this stage is to make a comprehensive list of all your debts.

This will make sure that you have a good idea of how much you owe and who you owe the payments to.

Once you make a list of all your debts, you’ll inevitably acknowledge the dreary ones that you’d rather avoid and not think about at all.

Make that list, know how much you owe and to who, and get started on building your finances towards repaying your debts.

  1. Negotiate with Your Creditors

Another way you can work on your debt management is to discuss your predicament with your creditors. 

Be sure to inform them of your situation as clearly and as honestly as possible.

It’s likely that you’ll get them to agree to an informal arrangement, such as a Debt Management Plan (DMP) that’ll allow you to repay them in fixed monthly payments.

If you can get your creditors to agree to a plan that makes it easier for you to repay them, great.

If you can negotiate a reduced total amount or a lower interest rate, even better.

Also, your creditors will probably want to work something out instead of taking you to court, since that will take a considerable financial and emotional toll on them as well.

  1. Prioritise Your Debts

When you’re unemployed and in debt, you may end up having to face some lose-lose situations.

If so, try to opt for the situation that allows you to prioritize your debts.

You might have to sell your car to keep paying the mortgage on your house. You might have to give up that old family asset just to get some extra money to repay your debt.

A lot of other painful things can happen. Just know that paying your debts off as quickly as possible will definitely be worth it in the long run.

  1. Create a Budget – Know Where You Stand

Another essential thing you need to do is to create a budget and thoroughly write down everything about your expenses and income.

List any sources of income you’ve managed to find and the income you receive from those sources.

Also write down your expenses. The utilities and groceries you spend on and any other expenses that you incur.

Having a budget will give you some semblance of control over your financial situation. 

Also, you’ll have a definite idea of how much you can afford to spend and where you can afford to spend it.

I recommend that you drop a few brands that you purchase and opt for less costly alternatives, at least till your financial situation stabilizes.

Being in control in a difficult situation will definitely make it a lot easier for you to manage it.

  1. Start Paying Off Debts

Now that you’re listed down your debts, talked to your creditors, and created a budget, it’s time to get down to actually repaying your debts.

When you start making payments, try to pay off the debts that have the most interest first.

I say this because more debt amounts to larger monthly payments as time passes, so the higher the interest rate, the more you’ll be paying in proportion to the actual debt amount if you take too long repaying them.

On the contrary, since you’re struggling to find employment and don’t have a lot of cash on hand at the moment, you might have to delay paying certain debts, or maybe you’ll only be able to afford minimum payments on your credit card loans or a student loan.

If you find yourself in such a situation, always prioritize your larger debts and repay as much as you can on them every month.

You can afford to keep making minimum payments on the ones with low interest, since the interest won’t harm you as much in the long run.

Pay the larger debts first, then move on to the ones with lower interest.

For more advice on paying off your debts, I suggest contacting an independent debt charity such as StepChange or National Debtline.

What Happens if You Can’t Repay Debt?

If you can’t repay debt, it’ll eventually have a drastic effect on your credit score.

The longer you drag it on, the more damage you’ll incur to your credit rating.

Also, your creditors will probably employ debt collection agencies and threaten to take you to court unless you repay the debt amount.

Eventually, you might have to opt for insolvency solutions such as bankruptcy, IVAs, and DROs. 

While you may be able to get back on your feet after a while, the financial after-effects of late repayment will continue to haunt you down the road.

FAQs – Manage Debts & Unemployment

Can I go to prison for not paying off debt?
In general, no, you can’t go to prison in the UK for being unable to make payments on any of your debts and loans, be it credit card loans, student loans, or any other loans. You’ll only go to prison if you’ve actively committed fraud in matters relating to your debts and if the fraud can be proven in court.
Can I get out of debt with no money at all?
Yes, you can, but it’s definitely not an easy route. You’ll have to be extremely careful and meticulous about how and where you spend your money. You’ll have to completely avoid credit cards, find stable sources of revenue, maybe sell your assets, and maybe even consider personal loans. It’s not easy, but yes, it certainly is possible.
Are loans a good idea to repay debts?
Yes, if they meet certain criteria. For one, if you can get loans at a low interest rate and use them to repay your debts, I see that as an absolute win. However, if you’re only getting high-interest loans, I recommend that you don’t take this route since it can end up costing you dearly if you can’t repay the amount you borrow. Also, always try to get low-interest unsecured loans, since you won’t run the risk of losing your assets if you can’t repay the loan.
Should I use my savings to repay debts?
Yes. When you don’t have a lot of money coming in each month, using your savings to pay off your debts is something you should definitely consider. Also, pay off the debts with the highest interest first.

Final Thoughts

Unemployment can make your debt situation seem a hundred times worse.

With the right attitude and mind-set, however, you can get back on your feet.

I hope this guide helped you understand some of the things you should be doing to pay off your loans in a pinch.


Are you struggling with debt?
Are you struggling with debt?
  • Affordable repayments
  • Reduce pressure from people you owe money to
  • Stop interest and charges from soaring