How to Get Rid of Debt when you’re on a low income

How to pay your loan if you don't earn much

Getting a loan is never a bad thing, especially for a businessman, you only need to ensure the potential yield of the fund will be enough to service the debt.

It’s unfortunate, that you don’t have control over everything that happens to your business sometimes, like this COVID-19 pandemic that has shut down businesses for five months now.

When you’re struggling to pay off your loan, then you need to stretch inward to service your debt and get out of the woods.

How to pay your loan if you don't earn much

How do you get out of Debt?

The first step to take is to evaluate your financial situation.


  • Estimate your income, assets, expenses, and liabilities

You can use a financial planning tool like the loan payment calculator to calculate your interest rate and payment frequency.

Piggly loan tools and several other calculators can help in planning your loan payment from the start.

You can use their budgeting, investing, and retirement tools to manage your income and expenses.

For example, you need to take out your fixed expenses (loan payment especially) from your income first before planning on the income.

This will help you to stretch inwards in your expenses and also find better alternatives (in terms of costs) to the goods and services you pay for every month.


  • Stretching inward to generate more money

When your sales are high, you should pay more than your regular monthly loan payment, this will enable you to pay less when sales are averaging.

You can also repay your debts from your other income and resources, depending on your income to expenditure ratio.

This will help you out when you suffer a small monthly loss in your business or when operating cost increases.

You can as well reduce your expenses or try to generate more income from your assets through rentals.

You can lease your properties, offer some of your assets, and even fixed liabilities for rental. Just look inward and you’ll get more ideas.

For you to manage your expenses well, you need to keep a notepad to list all your main expenses for evaluation and adjustment.

You can also utilize your free time to earn more. In this modern time, working at home even at late hours is not a possibility but a reality.

There is an unlimited number of things you can do online to make more money, the earlier you start it now, the better.


  • Applying for a Personal Loan

A personal loan is easy and you get approval quickly.

It has several advantages over other forms of loans.

Some of these are low-interest rates, and flat interest rates, collateral is not usually required, and most banks offer it to their clients.

Since a personal loan is easy and the interest rate is low, you can use it to pay off your expensive debt.

If you are in debt, you can try credit unions to get a quick personal loan.

You can start the application online, click on the Get a Loan tab from the homepage, and select the loan type – personal loan.

Next is to select the purpose, the amount needed, how quickly you need it, residence status, credit score, employment status, pre-tax annual income, DOB, and personal details and submit, it’s as easy as that.


  • Through Out-of-court debt settlement

Out-of-court debt settlement is based on a professionally prepared debt settlement plan.

This contains a comprehensive list of all your income, the claims of the various creditors against you, and concrete settlement proposals to your creditors.

The debt settlement plan is used to submit settlement offers for debt relief to your creditors while disclosing your financial situation.

For example, a creditor who has a claim of $10,000.00 against you could be offered the payment of $4,000.00 on the condition that the remaining debt is canceled.

Creditors often respond to such offers because they fear that they will receive less in insolvency proceedings due to their disclosed financial situation.


  • Making residual debt discharge after insolvency

All creditors must agree to the out-of-court debt settlement plan. If this can not be achieved, the out-of-court debt settlement has failed.

In most cases, this is followed by insolvency proceedings, which are opened by the insolvency court upon request.

Even in insolvency proceedings, there is still a chance of settling with the creditors.
The failure of the out-of-court settlement of debts does not mean that agreement in the insolvency proceedings is also ruled out.

The opening of insolvency proceedings increases the pressure on creditors to accept an offered settlement proposal so as not to go away empty-handed.

If no agreement can be reached, the so-called “good conduct phase” must be observed in private insolvency, after which residual debt discharge is granted.

There are ways of reducing the normal duration of the good conduct phase from six years to five or even three years.

This may require, for example, the payment of the full costs of the proceedings or the payment of a certain percentage of the debt.



It is not easy to adjust your expenditure when you’re on loss in business, especially with many liabilities.

But you’ve to determine your income and expenses to understand your financial status and plan to get out of the debt.

Getting your real net income is very important before you can even think of developing any plan or getting debt counsel.

If your financial status is buoyant to liquidate your debts, it will be easy to employ tips on how to reduce your expenses.

If needed, you can create another stream of income to offset the debt, it’s all on what works fine for you.