It's time to clean out the closets. So what do you do with stuff that's too torn up to give away? You can go 'green' with those rags!

Katrina Drones has 4 kids, so she knows just how fast they can go through clothes. She has a system for when they outgrow everything.

"I bag them up and pass them down," she says.

But what happens to the clothes that are ripped beyond repair?

"I have actually thrown some clothes away if they have holes in them," Katrina admits.

Turns out, there's no need to send it to a landfill. More than 90% of cloth is recyclable! Yet we re-use only about 15%. Emily Main heads up National Geographic's 'Green Guide'. She says we could recycle much more than we do.

"They get turned into stuffing for couches. Really fine high quality stationery is made out of recycled cotton rags. It's used as stuffing in car doors for acoustic insulation," Main says.

"I have actually never heard of a recycling place for clothes," Katrina says.

Salvation Army prides itself in leaving nothing to waste. About 40% of the clothes are sold in their stores. Henry Filoteo works with Salvation Army.

"What doesn't sell is recycled. Whether they are resorted and resold in other countries or they're sorted and then reprocessed to be used for other types of materials," Filoteo says.

There are also for-profit companies like 'Use Again'. They have 8,000 drop boxes nationwide. They sell about half the clothes to third world countries. The rest goes to textile recyclers who break it down. Chris Walsh is the V.P. of Operations for Leigh Fibers.

"We take it from a thread or yarn state down to a fibrous state, which allows us to mix it with other fibers that our customers need for their products," Walsh says.

Recycling is key for The Salvation Army.

"Every dollar that we receive in recycling, that's another dollar that we can funnel into our programs," Filoteo says.

Katrina is all about helping others, and is excited to make her next drop-off. This time it'll include all the cast offs in her house.

"Just because my kids can't wear their clothes anymore doesn't mean it's something that I need to throw away," Katrina says.

One critical thing-- don't throw dirty clothes into the recycling bag. One dirty item can contaminate the entire load.

Retailers are also getting into recycling. Some rain wear is made from old plastic soda bottles. Patagonia re-processes some of its fleece and cotton. You can mail in your old clothes, or drop them off at a Patagonia retail store.