How to Get Out of Debt With No Money and Bad Credit


Being an adult is hard, but being a financially stable adult is even more challenging. It’s rare to find someone not struggling with their finances in this day and age, so having debt is a normal part of adulthood and happens more often than you think.

If you happened to find yourself tangled up in debt, you’ve come to the right article. Our goal is to teach you how to get out of debt with no money and bad credit. We will cover what debt is, different types, what is good/bad debt, and how to get out of debt.

So, let’s start with the basics of how to get out of debt fast and avoid filing for personal bankruptcy.

What Does Debt Mean?

Any amount of money that has been borrowed from an individual or institution and hasn’t been returned counts as debt for the person who borrowed it – the debtor, if you will.

Debtors usually borrow money for some more significant expenses they can’t afford by agreeing to the terms under which they are to return the amount. The amount is generally returned gradually in installments and with interest.

Although getting that extra money can be useful for the moment, make sure to get rid of your debt as soon as you can. Why you might ask? Well, being indebted may have both short-term and long-term effects on your financial situation.

Short term negative effects include:

  • Your credit score suffers immediately
  • False feeling of financial security

The possible long term negative effects of being indebted are:

  • Fees can pile up over the years
  • High-interest rates prolong the time needed to repay the debt
  • The credit score is still affected
  • Increased stress and frustration
  • Possibility of legal prosecution if unable to pay the debt off

Types of Debts

Different life stages bring different financial requirements that might push a person into debt. Debt can take on many forms, but here are the most common ones:

Student Loans Debt

The average price for a college semester in 2017/18 was $20,770 for the public, and $46,950 for private schools in the US, according to ValuePenguin. This is an amount that not many students (or their parents) can afford, so most of them resort to taking a student loan to cover their education expenses. This debt ends up looming over their accounts long after graduation.

Credit Card Debt

This is a type of revolving debt, meaning that as long as you keep your spending under the limit and repay the money accordingly, you can keep borrowing money each month, albeit with a higher interest than usual. Although it is convenient and easy, this is precisely why this type of debt is dangerous and can negatively affect your credit score. Compared to other loan types, where your goal is to repay your debt eventually, you can hold onto your credit card debt for an indefinite amount of time – often even your whole life.

Auto Loan Debt

An auto loan is what it sounds like – you borrow money to buy a car. A car is an investment and an important one since it’s essential for many people to be able to function in society. It’s no surprise to learn of the steady increase of auto loan debt over the years, as we all know that being a car owner is expensive.


Even though a car is a huge investment, possibly the most significant investment you will make in your lifetime is buying a home. It’s almost impossible to buy a home without any financial aid, and the most convenient financial aid you can get is to take up a mortgage that you will pay off during the following 15-30 years. Mortgage debt rates continue to rise steadily and reach new heights, with the latest info informing of a $10.22 trillion total at the end of 2020.

Personal Loans

A personal loan is very versatile. It can be used for important events, holidays, medical bills, or other large purchases, but also to eliminate debt through debt consolidation, which is a service many loans offer. It is a better form of debt compared to credit cards because of the lower interest rates, but it often has additional fees and requires fixed monthly payments.

Business Loans

Starting a business without any money is impossible, so if you don’t have any savings, you have to resort to taking a business loan. If your business idea and debt payoff plan are solid, you have a chance at succeeding in the very competitive market.

What’s Considered Good Debt?

Debt doesn’t have to always be a bad thing. If you are smart with the reasons for getting into debt, it can result in getting out of debt with a profit rather than a loss. But how is that possible? Well, in these cases, taking out debt is considered an investment or a necessary sacrifice you make to achieve a specific goal/result in the future. This can be achieved with certain types of debts:


Taking out a mortgage to buy a house can have many benefits in the future. You have the option to get into the real estate market by purchasing a home, furnishing it, and reselling it for a profit. Even if you don’t plan on selling, once you pay off your mortgage, you possess a valuable financial asset in the form of your home. The mortgage requires lower monthly payments compared to paying rent, and they also help build equity in your home.

Business Loans

If you have an innovative business idea and a stable debt management plan, taking out a business loan can give you the jumpstart you need to launch a successful business. As long as your business succeeds and becomes lucrative, you will be able to easily pay off your debt and continue prospering on your own.

Student Loans

A student loan facilitates your education and helps you get a degree. As a graduate, you are more likely to get a higher-paying job that will allow you to repay the debt in time without being affected by growing interest rates and losing even more money. However, make sure that the field you choose to get educated in will allow you to earn enough money to get out of debt. Otherwise, the investment won’t really pay off and will leave you losing more and more money.

What Is Bad Debt?

Any debt that leads to you losing more and more money while struggling to repay it is bad debt. This includes taking out large debts with high-interest rates, such as:

Credit Card Debt

This is the most notorious and common type of bad debt. Credit cards may be a convenient and fast way to get some extra money, but you’re not using the money to buy any valuable assets that will increase in value over time. Interest rates are also higher for credit cards, making getting out of debt harder, so, all things considered, it doesn’t seem like the best loan option. However, if you have this type of debt, consider taking credit card consolidation loans.

Auto Loan Debt

A car can be a very convenient and often necessary part of our lives, but it’s not essential. Taking out an auto loan to buy an affordable (or even used) car can be considered good debt since it makes your life easier and more convenient. However, stop creating unnecessary debt by purchasing a vehicle more expensive than necessary, going beyond convenience towards luxury. A car starts losing its value as soon as you leave the lot, so, even if you decide to shell out a large amount of money on a newer, more expensive model, you’ll end up losing money in the long run since you will never be able to sell it for the same price.

Tips for Getting Out of Debt With Bad Credit and No Money

Let’s get to the point of why you’re reading this article. Now that you’re familiar with some aspects and types of debt, here is the answer to how to get rid of debt. It’s small steps that can have a significant impact:

Be Clear on How Much Debt You Have

The first step towards settling your debt is being aware of the exact amount you owe. Get a credit report to figure out how many active accounts you have and contact your creditors for any additional information. Once you are aware of the total amount of debt you have, you can start planning how to get out of your debt.

Try Credit Counseling and Debt Management Programs

Debt management can be overwhelming to handle by yourself. It may be beneficial to look for services that will guide you through the process.

Re-Examine Your Budget

Often, the key to solving your debt issue is just a matter of adjusting the way you spend your money and cutting costs. Take a look at your household budget and think about ways you can distribute it more smartly. The faster you get rid of your debt, the better. If you stop spending money on some non-essential things, you can focus it on repaying your debt, and that is how to get out of debt fast.

Go to Your Bank

If you’re a long-term customer of your bank, they may be inclined to make you a loan with better terms.

Join a Credit Union

Compared to banks, credit unions offer better rates, lower fees, and higher savings. They also can give you a sense of community and have lower qualification standards.

Apply for Debt Consolidation Loans

A debt consolidation loan is a loan with better payoff terms used to cover all previous existing loans you might have. This is the right way of paying off debts with non-ideal terms and replacing them with a loan you actually have a good chance of paying off in its entirety.

Peer-To-Peer Lending

Through peer-to-peer lending, you can connect with a potential investor willing to lend you a certain amount of money under certain conditions, helping you deal with some already existing debts you have. Take a look at the best peer-to-peer lenders.

Home Equity Loans

If all else fails and you’re still wondering how to get out of debt with no money and bad credit, you need more drastic measures. Taking out a home equity loan is always an option if you are a homeowner. Taking out this second mortgage will have a higher interest rate than your first one, but it still has a lower interest rate than most other loan types.

Submit an Application to a New (Higher Paying or Additional) Job

Yes, we know. Duh – everyone wants a higher-paying job, but if it were that easy to get one, there wouldn’t be so many people in debt. If you can’t find a higher-paying job, at least consider the option of getting an additional job that will increase your income and help you pay off your debt faster and easier.

Ask Friends and Family for Help

This is one of the simplest and most complex solutions to get rid of debt. A loan from a family member or friend doesn’t have strict fees and interest rates and will give you cash fast, but failing to give it back in time, or at all, may permanently damage your relationship with that person. Tread lightly if you choose this option.

Start Fixing Your Credit Score

Your FICO score makes all the difference to the loan terms you are offered when applying for a loan. The higher your score is the fewer fees and interest rates you will have to pay. Many factors can influence your credit scores, such as your diligence with paying your bills, earnings, or debt-to-income ratio. Because so many things can affect it, it’s not impossible to fix your credit score.

Coronavirus (COVID-19) Debt Relief

Getting out of debt isn’t easy, but learning how to get out of debt with no money and bad credit during a worldwide pandemic takes it on a whole new level. Loan providers are aware of this and have strived to provide some relief in the form of:

  • Suspending student loans
  • Suspending foreclosures
  • Waiving interest
  • Mortgage forbearance
  • Skipping payments

Contact your loan provider to learn their relief policy.


Not all hope is lost when you get into debt. By following our tips, you may find yourself making good progress towards living a debt-free life. But, if you need money right away, try applying for bad credit loans with guaranteed approval. Lastly, we sincerely hope our article motivated you to improve your financial situation as well as to strive to make better financial decisions in the future.


What to do if you are drowning in debt?

The most important thing to do in this situation is to remain calm and patient. Next, find out the exact amount of money you owe and then consider your options, such as: taking out a consolidation loan, starting a new job or some overtime work, or try borrowing money from a family member or friend.

How can I get out of debt fast with no money?

Assess the amount you owe, then try talking your bank into giving you a better offer. If that doesn’t work, you have the option to take out another loan to cover your existing one, preferably with better terms. Re-examine your budget and start putting more money towards paying off your loan.

How do you clear debt quickly?

If you’re wondering how to get out of debt with no money and bad credit, the quickest solution is to take out another loan to cover it. This is usually done by debt consolidation when you take out one bigger loan to cover a few smaller loans, usually with better terms.


My eyes rarely take a break from staring at my laptop's screen—I am Big Brother, scanning the web for news and information worth sharing. Full transparency—a substantial chunk of my screentime is also dedicated to watching TV shows, but balance is key, right? Writing is how I choose to share my findings with the world while keeping my love of language and creativity alive.

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