How to Get out Of Debt with No Job 

If you’re out of work and deep in debt, don’t worry you’re in the right place. This guide is all about how you can get out of debt without a job. We have lots of readers in the same boat. In fact, over 170,000 people visit our website each month to find ways to handle their debts.

In this article, we’ll share some helpful steps:

• How to use government funds to help with money troubles.
• Ways to make your savings work harder.
• Ideas for earning money on the side.
• Tips for watching your spending and cutting back.

Our team understands the worry and fear you may feel, as some of us have been there ourselves. But remember, it’s possible to handle your debt, even when you’re out of work. Let’s dive in and find out how to take control of your debt and start feeling better about money.

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 ensure 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 whom, and get started on building your finances towards repaying your debts.

2. 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, it is even better.

Remember, 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.

3. 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 a situation that allows you to prioritise 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.

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

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

5. Start Paying Off Debts

Now that you’ve 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 prioritise 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.

Tip: Resist the temptation of getting payday loans to clear your debts. Payday loans often come with extremely high-interest rates and can exacerbate debt issues.

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

Thousands have already tackled their debt

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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