Stop sinking money into monthly payments and find the best way to get out of debt, even with low income.

Whether you owe thousands of dollars or hundreds of thousands, getting out of any amount of debt can seem overwhelming. As your balances go up, more and more of your income goes to eliminate debt. This leads to you rely on debt, even more, to cover expenses as you live paycheck-to-paycheck. But even on a limited income with no extra money, you CAN figure out how to get out of debt with the right strategy. is here to help with these step-by-step instructions.

Business Man Karate-Kicking a Debt Bomb

Step 1: Assess your debt

Write down everything you need to know about each debt you owe

The first step to get out of debt is to figure out exactly where you stand right now. That means taking a full account of every debt you owe. And that’s doesn’t just include loans and credit cards. That can also include things like court fines, child support, and collections for utilities or in-store credit lines.

You need to know who you owe, how much you owe, and where you are with your payments. You need to know interest rates and And you can’t just think that you can keep this all straight in your head. Write it down. To make things easy, we’ve provided a free debt worksheet below.

Estimated time: 1 hour

Cost: Free


Download’s free debt worksheet »

Tip: For debt that are behind, make sure to note how many months behind each debt is. If a debt is in collections, make sure to take note of when it first became delinquent. This will be important later as you set priorities for repayment.

Step 2: Make a budget (or review your existing one)

Know how much income you have versus expenses

The next step in deciding how to get out of debt is evaluating your budget. You need to know how much capital (money) you can generate for things like repayment plans or settlement offers. You also need to make sure you don’t have any spending leaks. Those are all the little extra expenses and overspending on necessities that you might not notice until you write everything down.

What you’ll need:

  • Your most recent bank statements
  • Most recent paychecks (or just note income listed in your statement)
  • Most recent bills (debts and other obligations)

Estimated time to make a budget: 2-3 hours

Estimated time to review an existing budget: 30 minutes – 1 hour

Cost: Varies based on budgeting tool used

Resources: Read’s free budgeting guide

Options for budgeting:

Step 3: Check your credit

See where your credit score stands and double check your debts

You also need to know where your credit score stands. This includes reviewing your credit report and your credit score. You can download your credit reports for free through, if you haven’t checked it in the past year. Otherwise, you can use a credit monitoring tool to check your report and your credit score.

This step is important for two reasons:

  1. Your credit report can help you make sure you’ve detailed all your debts in Step 1.
  2. Good credit means you have more options available for debt relief.

TIP: The public records section of your credit report can list debts you may have missed, such as court fines

Estimated time to review your reports: 30 minutes – 1 hour

Cost for credit reports: Free


Estimated time to sign up for credit monitoring and check your score: 10-15 minutes

Cost for credit score: Varies based on tool (usually free – $40 per month)

Options for credit monitoring:

Step 4: Understand the five ways to get out of debt

Know your options so you know which ones may work for you

[On-screen text] Get out of debt: The breakup
Narrator: Do you have an unhealthy relationship with debt? In the beginning, it was careless love – dinner, drinks, presents. But then, the passion faded. And all that was left were the bills.
It might be time to dump debt. But how do you break up the right way?
There are five ways:
1. Pay it off
2. Prove it’s not yours
3. Qualify for debt forgiveness
4. Discharge through bankruptcy
5. Wait for the statute of limitations to expire
How do you perfectly execute this separation plan? will explain each step. Check it out now and move on to healthier relationships
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No matter what or who you owe, there are five basic ways to get out of debt.

  1. Pay it off
  2. Prove it’s not yours
  3. Qualify for debt forgiveness
  4. Discharge through bankruptcy
  5. Hide until the statute of limitations runs out

Depending on the status of your debt and how much you owe, you may use more than one solution. You forgive the debts you can, prove the ones that aren’t yours, then pay off or discharge the rest.

Cost: Free

Time to research: 1-3 hours

Want to know which solution is the best choice for your unique financial situation? Talk to a debt resolution specialist now for a free evaluation.

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Method 1: Pay your debt off

With this method, you work to pay back everything you owe. However, this doesn’t mean that you stick to traditional monthly payments at your current interest rates. In fact, you probably shouldn’t. Instead, you need to explore debt solutions that reduce or minimize interest charges, such as refinancing and debt consolidation.


Method 2: Prove the debt isn’t yours to repay

You may not actually be liable (on the hook) for every debt on your list. Debt collectors don’t always target the right person. You may be getting collection letters for debts from someone with a similar name. If your spouse incurs tax debt without your knowledge, you may qualify for Innocent Spouse relief.


Method 3: Qualify for debt forgiveness

Some (not all) debts can be forgiven if you take certain steps to qualify. For example, if you have student loans and work in public service, you may qualify for student loan forgiveness. Some people also refer to debt settlement as debt forgiveness.

Although in this case, your debt is not forgiven without penalties. You will incur a seven-year negative item in your credit report for each debt you settle. This can negatively affect your credit score. However, if you have debts in collections, they already come with a seven-year credit penalty. So, it may be best to get rid of them with settlements.


Method 4: Discharge the debt through bankruptcy

The last option for getting out of debt is to have the debt discharged by a bankruptcy court. Depending on your financial situation and which type of bankruptcy you file, you can discharge all or some of what you owe. With Chapter 7 bankruptcy, you can get out of debt in as little as 4-6 months, but you will incur a 10-year penalty on your credit report. Chapter 13 bankruptcy can take 3-5 years, but the credit report penalty only lasts seven years.

TIP: It’s possible to discharge most debts through bankruptcy, even student loans. However, in cases like federal and private student loans, you must be able to show that not discharging the debt would cause continued financial hardship even after the discharge of your other debts.


Method 5: Wait for the statute of limitations to expire

Debt collectors only have a defined window of time that they can legally pursue you for a debt. This is known as the statute of limitations on collections; the clock varies by state but usually caps out at 10 years. When that clock runs out, collectors no longer have the ability to sue you for the debt in civil court. So, once a debt is past the statute of limitations, you tell the collector to stop contacting you and there’s nothing else they can do.

This not only applies to credit cards, utilities and medical bills that lapse into collections. It also applies to IRS collection actions. The IRS will only attempt to collect on back taxes for ten years. Once that clock expires, they stop garnishing your wages or pursuing any further collection actions.

TIP: Be careful when you talk to debt collectors! If you make a statement that acknowledges that you owe the debt, then you can reset the clock on the statute of limitations.


Step 4: Make a plan to eliminate each debt

Now that you understand all the methods you can use to get out of debt, it’s time to decide which option (or combination of options you want to use). Ask yourself these questions:

  1. What debts do you have that would be good candidates consolidate?
  2. Looking at average credit card APR, how many interest rates can you negotiate?
  3. If you have student loans, are you a better candidate for federal repayment plans OR private student loan refinancing?
  4. How many debts do you have in collections that would be better candidates for debt settlement?
    1. How many of those debts are close to the statute of limitations in your state?
  5. Do you owe so much to so many different lenders that you’d be better off declaring bankruptcy?

Keep in mind that you’ll want to consolidate before you settle any debts. Settlements damage your credit score, which could make you ineligible for many consolidation solutions. This will help you set priorities and determine the order you need to apply for solutions in the next step.

TIP: Consolidation is often the first solution you should try since it simplifies your payment schedule and won’t damage your credit.

Cost: Free

Time: 1-2 hours can connect you with services to solve every challenge with debt that you face. Talk to a debt resolution specialist now to connect with all the solutions you need to become debt free.

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Step 5: Set up your debt solutions

Now it’s time to start applying for the solutions you want to use. Setup time and cost will both vary by which solutions you apply for. For example, getting approved for a debt consolidation loan takes about a week. The consultations for debt management programs and settlement programs only take an hour. However, completing the enrollment on a debt management program can take a few weeks as the credit counseling team negotiates with your creditors.

Also, keep in mind that you shouldn’t set up settlement offers until you’re not concerned about credit score damage. You may need to delay these solutions until you’re ready to use them.

TIP: If you’re getting a loan, avoid loans with early repayment or prepayment penalties.

TIP: For settling medical debt collections, talk to the original service provider first. They may be willing to work out a payment plan and cancel the collection account.

Time and Cost: Varies based on solutions selected

Solution Time Cost
Balance transfer 1 hour to apply, 3-5 business days to receive card No upfront costs; avoid annual fees
Consolidation loan 1 hour to apply, 7 days to get approved Loan origination fee, averaging 1% of amount financed
Debt management program 1-hour consultation, 3-4 weeks to get approved Varies by state, capped at $79
Debt settlement program 1-hour consultation 2-5% of amount settled, paid upon settlement
Federal student loan repayment plans 2-3 hours to apply Free
Student loan refinancing 1 hour to apply, 7 days to get approved Loan origination fee, 1% of amount financed
IRS Installment Agreement 1 hour to apply, up to 30 days to get approved $52 setup fee for Direct Debit, $120 setup fee for payroll deduction
Tax debt settlement 3-6 hours to set up, 4-6 weeks to get approved $186 application fee

Step 7: Increase your income to get out of debt fast

Once your plan to get out of debt is working, then you should take steps to increase your income. More income will allow you to pay off debt faster. You can make larger payments to eliminate transferred balances or make extra payments on consolidation and refinanced loans. If you have debts you need to settle, more income will allow to generate the funds you need for settlement offers faster.

There are several ways to increase your income:

  1. Ask for a raise at your job or see if you can pick up more hours or get overtime
  2. Supplement your income with side gigs, freelance work, or a part-time job
  3. Sell things you don’t want or need anymore to pocket the cash
  4. Downsize your car or consider public transportation
  5. Cut expenses you don’t need in your budget or scale back necessary expenses


Step 8: Don’t self-sabotage as you work to get out of debt

Finally, as you work your way out of debt, don’t do anything that will sabotage your efforts. Also, take every step possible to avoid new debt:

  • If possible, put off buying a new car or home until you’re out of debt.
  • Only take on new debt or open a new credit card if the purpose is to consolidate or refinance existing debt.
  • Stay on top of medical bills to avoid new collections. Even if your insurance is supposed to pay, make sure they do and cover everything you expect them to cover.
  • Leave credit cards at home when you go out, so you can avoid impulse purchases; carrying cash helps avoid overspending
  • Don’t take big vacations, where there’s a high-chance that purchases will wind up on credit cards or make big purchases with in-store credit.
  • Set up an emergency fund so unexpected expenses and emergencies don’t go on a credit card


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