Cheapest Way To Get Out Of Debt Of 2023

If you are in debt that you can’t pay or your bills are extremely due, you will need ways to get out of debt, a cheap one at that. There are many options to look for, like debt settlement.

The American Fair Credit Council (AFCC), a group of industry debt settlement businesses committed to a stringent code of conduct, can suggest debt settlement as the cheapest way.

According to a 2020 report, debt settlement has an average of $2.65 consumer saving for every dollar in the costs, and virtually all offer settlements got a reduction of the client’s debt that was more than the fees associated with the debt.

Let’s take a look at whether debt settlement is the cheapest way to get out of debt.

Cheapest Way To Get Out Of Debt

Key Takeaways

  • Debt settlement offers can range from 10%-50% of what you owe, and the fees might range from 20%-25%.
  • Debt settlement can negatively impact your credit score.
  • Your debt settlement record stays on your credit report for seven years.
  • Chapter 7 bankruptcy can be completed in three to six months, and it also stays in your credit report for 10 years.

Cheapest Ways To get Out of Debt

Cheapest Ways To get Out of Debt

If you are struggling to pay your debt, then here are some effective ways using which you can repay your debts faster:

1. Review your budget

Are you spending more money than you can afford? You can only find out once you review your budget.

Create a list of your monthly expenses; do not leave out anything. Identify items that are not important or items that you can cut down on.

Purchase cheaper alternatives of the same items, compare prices before purchasing anything and try to find the best deals.

2. Start a side hustle.

Sometimes survival means utilizing most of your time to earn extra money.

Find a part-time job; you can become a delivery person, become a driver, babysit, do dog walking, or you can even do some seasonal jobs.

Let that extra cash come in because the best way to get out of your debts faster is to pay more, and for that, you will need to make room for extra money to come in.

3. Do freelancing

Freelancing is a great alternative to doing a part-time job. And the best part is that freelancing allows you to give less time and make more money.

Find what you are good at and offer that service. You can be a content writer, graphic designer, video editor, photographer, or artist; the list is endless.

Go to freelancing platforms such as Upwork, Fiverr, etc., and start earning using your skill.

4. Sell your stuff

If there are plenty of clothing items, accessories, books, instruments, or basically anything lying around in your house that you do not need, then sell them.

You can use Etsy, declutter, or other similar apps to sell and make money from your stuff.

5. Limit your credit card usage.

If you keep using your credit card for everyday use, then it will become impossible for you to get out of debt.

No matter what your credit card company scares you with, stop using your credit cards, burn them, cut them, and get rid of them.

6. Uninstall shopping apps

How often than not do we end up spending on things we didn’t even need?

We are sitting ideally, we open our phones, click on that shopping app, scroll through, and make irrelevant purchases.

Your dopamine levels go high each time you make a purchase, and this is how you get into a daily habit of scrolling through these apps to purchase something.

Uninstall those shopping apps, and always install them later when you want to make an important purchase.

7. Sell your car

Do you know the average monthly payment for a car loan is $667? You are making this kind of outrageous payment each month, and now you are struggling from paycheck to paycheck.

If you have made the mistake of buying a car way out of your budget and want to get off debt quickly, then may be you should sell that car.

It is not the most pleasant thing to do, but it is important to reduce your overall debt.

8. Cut down on expensive habits & Hobbies.

Going out every other day to hang out in a cafe or to have food in a restaurant is only going to make your life tougher in the long run.

Stop wasting money on expensive restaurant food and cook your meals yourself. And if you have expensive hobbies like playing golf or spending money on collecting stuff, then really, take a pause.

All your expensive hobbies and habits can be cut down, and once you do that, you will see how much money you save over time

9. Make a grocery list and try buying online.

Not having a grocery list is the worst thing that you can do. When you have a grocery list, you know what to buy, and you can avoid piling up your shopping cart with any item you see.

Make a list of essential items and stick to them. Also, you can try purchasing groceries online as it will allow you to see if there are cheaper alternatives available; it will help you eliminate unnecessary items from your cart, among other things.

10. Avoid spending on subscriptions.

No matter how hard it seems, you can go without watching your favorite shows for some time.

Entertainment subscriptions are expensive, and they take money out of your pocket each month.

Find a free entertainment source online, or ask your friend to share their Netflix account with you.

11. Ask for a Lower Interest Rate 

If you have been a loyal customer with good repayment and credit history, then try talking with your credit card company to lower down the interest rate on your card.

Credit card companies often agree to reduce your interest rate as a goodwill gesture. 1

Best Ways To Get Out Of Debt Faster

Best Ways To Get Out Of Debt Faster

Now that you know what habits you need to change in order to get out of debt faster. Here are actual methods that can help in alleviating your debts faster:

Snowball method

If you have multiple debts, then the snowball method can be a great way to get rid of your debt.

In this method, you make minimum payments towards all your debt and a little extra payment towards your lowest amount of debt.

Once you repay the lowest debt, you repeat the process and move on to putting extra money toward the next smallest debt.

This method gives you a sense of accomplishment as you keep repaying your loans one by one.

Avalanche Method

This is the opposite of the debt snowball. In this method, you make minimum payments towards all your loan but put extra money towards the loan with the highest APR.

Once you get rid of your highest APR loan, you move on to the next highest APR loan and keep repeating the process until all your debts are wiped off.

This method allows you to save money on interest and is a great way to come out of debt.

Debt Snowball Vs Debt Avalanche

Balance Transfer

If you do not have a huge amount of debt, then a balance transfer is something that you can consider.

In this, you basically get your credit card balances transferred to a new credit card offering zero APR credit transfer.

Such an offer only lasts for a limited time period, and during this time, you will not have to pay a hefty credit card interest rate.

However, some credit card companies might charge a high balance transfer fee, so take that into account.

And also, once the promotional period is over, the company will start charging you interest rate again.

So make sure you go for this option only when you know you will be able to repay your debt in 8-12 months. 2

What To Do When Nothing Works?


If you have tried doing everything mentioned above but still see no way out to get rid of your debts then here are some option to consider:

1. Debt Settlement

The Debt settlement is a method of cleaning your debt by settling with the other party for a fraction of the original amount of your debt by guaranteeing the lender a big payment.

The process is also known as “debt relief” or “debt adjustment. Depending on your circumstances, debt settlement offers might range from 10% to 50% of what you owe. After then, the creditor must choose which offer to accept.

Consumers may either settle their debts themselves or pay a top debt settlement company to do it for them.

In the latter situation, you have to pay a certain commission of a percentage of your enrolled debt for their fee to the business.

When you enroll in the program, the debt you have at that moment is your enrolled debt.

The firm can not impose this fee until your debts are resolved. Fees are between 20% to 25% on average.

Read: Difference Between Debt Settlement And Debt Consolidation


Those who go for debt settlement programs because they were not able to pay their financial burden but still have continuous payments don’t have enough bargaining strength when compared to those who couldn’t make any payments.

Because of this, they stop all payments immediately. Delinquent debt and accepting to settle for less than you owe can significantly influence your credit score negatively, and if it goes to the mid-500s, this is a bad credit score.

The bigger decline you have equals to high score before you fall behind.

Payments you make after the due date can stay on your credit report for a maximum of seven years.

The more you don’t pay, the more late penalties and interest you will have and increase your balance and make it harder to pay off the entire debt in the case you don’t get a settlement deal.

Once consumers become late, they might expect intrusive debt collection phone calls.

Creditors may also sue customers for debts over $5,000—debts that are worth their time, in other words—resulting in wage garnishment.

Read: Golden Financial Services Reviews

2. Credit Counselling

Nonprofits and government entities offer credit counseling for a very low price or without taking any fee.

The surprising thing is that most credit companies occasionally support credit counseling services in part.

You may have the right to get a lower interest rate and the right to waive any penalty fees if you choose to work with a debt management plan with a credit counseling service.

This kind of incentive could help you to pay off your debt quicker, and it might allow you to afford the increased monthly payments.

In addition, you still have the chance to not get any decrease in your interest rate if you have considerable financial difficulty.

Your credit score may suffer less as a result of not having to default on your obligation.

3. Declaring Bankruptcy

Debt settlement may benefit everyone if people involved do it correctly. It helps people to get rid of debt that they cannot pay and save extra money.

The debt settlement companies that are working to help people make their debt settled make money with an extremely important service, and creditors get more money than they would or at least get some amount of money if the consumer stopped paying or filed for bankruptcy under Chapter 7.

Under Chapter 7 bankruptcy, the non-exempt assets of the debtor get liquidated, and the profits go to repay the creditors.

The things that differ by the state might include your personal or household belongings, a part of home equity, your funds for retirement, or a car.

In comparison to debt settlement, you can complete Chapter 7 bankruptcy in three to six months.

The bankruptcy process will be on your credit report for ten years, but it might not have as much stress and help your credit score to get better faster. 3


For many people, using debt settlement is generally the cheapest way to get out of the deep debt they are in.

However, it is important to note that this mostly depends on the amount you owe and how much stress you are willing to take when you compare it to other alternatives.

You have to understand all the benefits and drawbacks before you go down the debt settlement route. The best strategy is to look into all three possibilities.



Can you repair your credit score after using the cheapest way to get out of debt?

You can, but it takes a while. However, it is worth mentioning that your credit score does not get affected as much as declaring bankruptcy.

Declaring bankruptcy is the most dangerous one for your credit score, and then comes debt settlement.

There might be some different things that could be beneficial to look for, but legally there isn’t much to choose from.

Credit counseling is another way of going, but that is definitely not a sure way to settle your debt since it is just counseling, and if you end up working with the wrong company, it could affect the outcome of the counseling.

How hard is it to find the cheapest way to get out of debt?

There are many ways to find ways to get out of debt, from bankruptcy to credit counseling, but many people prefer using debt settlement as that way is seen as the best way to get rid of your debt without ruining your financial profile in a really bad way.

It takes time to research and find out all the possibilities to get out of debt but looking back to other examples in the past; debt settlement seems like the best and cheapest way to get out of any outstanding debt.

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