There are many ways to get out of debt, and each has its own rules, guidelines, eligibility requirements, and also timelines.
Some ways to pay off your debt can take years, some can take much less.
Before we go over the quickest ways out of debt, let’s look at some of the other options to become debt free.
Options to Become Debt Free
Many will say some of these options to becoming debt free or get out of debt are common sense, and they are, other options require the intervention of third parties, or help from those you owe.
- Pay more than the monthly minimum payment. This works for credit cards and most loans, unless the loan has a pre-payment penalty. By paying more each month, you get out of debt quicker.
- Jon Emge’s debt snowball method. This again requires you to pay more each month to one specific debt, then as that account is paid off, you take the extra money and pay that to another account, until it is paid off. Like a snowball rolling down a hill, it gains momentum and more snow….and less debt.
- Debt management plans. This is just like my debt snowball idea, but you may need to use a third party to assist you in facilitating the plan.
- Get a second job to earn more, which ties in with paying more each month to pay off your accounts.
- Consolidate the debts. Consolidating the accounts you have or a debt consolidation loan, is a way to get out of debt quicker. However, you need to address what bought you to this point, and insure you do not go there again.
- Settling an account. Settling an account for less than what is owed can get you out of debt quicker, however, there are some caveats. One is you need the money/cash to do this, and second, it can be reflected on your credit file.
- IVA’s or Individual Voluntary Arrangements. These take 5 years in most cases, but they can be a quick way to get out of debt. There are some eligibility requirements, and if you own property or have other assets, these may be the better option to get out of debt.
So what is the quickest way to be debt free!!!!
Bankruptcy or a Debt Relief Order
There are many options to get out of debt, but the quickest does involves the courts, and depending on the level of your debt, Bankruptcy or a DRO/Debt Relief Order is the quickest.
Barring hitting the Lottery and having the winnings to pay off your accounts, a DRO or Bankruptcy will have you debt free and a fresh start in 12 months…just 1 year.
Debt Relief Orders are for debts of £20,000 or less, and Bankruptcy here in the UK for debts exceeding £20,000.
Yes, there are conditions and much needs to considered prior to making such a decision.
- Do you own property?
- Are the debts in just your name?
- How much do you owe in total?
- Do you have any surplus income after allowed expenses?
- Are your debts £20,000 or less?
- Do you have any assets?
- Do you have any surplus income that exceeds £50 a month after allowed expenses?
It is a lot to take in and consider when looking at options to get out of debt.
As always, get professional advice, and know where you stand.
However, in looking at getting out of debt, besides hitting the lottery, a huge inheritance, or some other windfall, Bankruptcy and Debt Relief Orders are one of the quickest ways to be debt free.
Keep in mind the restrictions of both, and also the impact on your credit score. But again, as I always say, if you are struggling with debts, your credit should be the last thing you worry about.