What are the Consequences of Personal Debt?

Depending on how much debt you have, and what kind, personal debt can have major consequences on your life and finances.

Too much personal debt can mean you owe far more on your payments than you are able to afford.  Debt can snowball very easily if you spend more than you have and only pay the minimum amount due on our bills.

One of the most common ways people take on too much personal debt is through credit cards. Many people use their cards without thinking about how they will pay their balances. Taking out a credit card can seem like a great idea at the time – something you can use to fund larger expenses or in an emergency – but it can be very easy for your credit card use to spiral out of control, drowning  you in the credit card debt that you cannot pay.

Taking on too much debt can have a negative effect on your credit score, which can lead to higher interest rates on future loans, or you may not be able to obtain loans at all.

Also, high debt payments mean you have less money to spend on other things and represents a risk should higher interest rates or unemployment force you to cut spending further.

At the end you have to pay off all your debt.  If you cannot pay your consumer debt, you may be forced into consumer proposal or bankruptcy which will further stain your credit ratings and cause you additional expenses.

If you have trouble paying the mortgage, losing the house is a real possibility. This is one of the most common problems faced for those with extensive debt.

If you are renter and cannot pay rent due to the debt, it can result in an eviction.

Besides the financial problems, extensive personal debt can take a personal toll on you and your family.  One of the main emotional effects of personal debt is stress. Debt can weigh on you like a burden, something that constantly follows you and presses down on you.  Debt can go beyond simply the inability to pay bills on time, it can literally cause both physical and mental health problems.

With excessive debt in a household usually comes some assignment of blame. If one spouse in a relationship was responsible for incurring most of the debt, the other spouse may feel angry or frustrated toward the other. In many cases, this can act as a catalyst for a divorce.

Never ignore a debt problem.  If you are struggling with your debt payment, do not be hesitant to seek a help of professionals who can put you on the right track and help you release from debt.