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Helpful answers
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Jan 9, 2016 6:07 PM in response to sunshingby AJ397,Follow the directions here: https://support.apple.com/en-us/HT204306
It sounds like you are at this step:
Erase your device with recovery mode
If you've never synced with iTunes or set up Find My iPhone in iCloud, you'll need to use recovery mode to restore your device. This will erase the device and its passcode.
- Connect your iOS device to your computer and open iTunes. If you don't have a computer, borrow one from a friend, or go to an Apple Retail Store or Apple Authorized Service Provider.
- While your device is connected, force restart it: Press and hold the Sleep/Wake and Home buttons at the same time. Don't let go when you see the Apple logo — keep holding until you see the recovery mode screen.

- When you see the option to Restore or Update, choose Restore.

iTunes will download software for your device. If it takes more than 15 minutes, your device will exit recovery mode and you'll need to repeat steps 2 and 3. - Wait for the process to finish. Then you can set up and use your device.
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Jan 9, 2016 6:18 PM in response to sunshingby AJ397,I've only used recovery mode once, but I think it was pretty quick. It may take a few tries though. -AJ
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Jan 10, 2016 1:26 AM in response to sunshingby lllaass,If recovery mode does not work try DFU mode.
How to put iPod touch / iPhone into DFU mode « Karthik's scribblings
You can also try:
If you previously turned on FIndMyiPod on the iPod in Settings>iCloud and wifi is on and connected go to iCloud: Find My iPhone, sign in and go to FIndMyiPhone and use Remote Wipe to erase the contents of your device. If you have been using iCloud to back up, you may be able to restore the most recent backup to reset the passcode after the device has been erased.
You can also wipe the iOS device by installing the FindMyiPhone app on another iOS device and using that app to wipe the device.