5 Consequences of Carrying Serious Debt

Anyone burdened with serious debt knows that it can feel like an invisible cloud hovering over your head at all times. Even though nobody else can see it, it’s still there—and it certainly affects more areas of your life than just financial health.

Here are five very real consequences of having significant debt. The key is to use them as motivation to proactively tackle debt rather than as reasons to become discouraged.

Consequence #1: Anxiety

The data doesn’t lie when it comes to debt’s effect on mental health. One study found that people struggling to pay off debts and loans were more than twice as likely to experience issues like depression and serious anxiety. This is completely understandable, as it’s easy to feel overwhelmed when you’re facing down serious debt. This mental stress can even translate into physical symptoms, which is one personal reason why it’s highly important to address debt.

Consequence #2: Collector Calls

Have you started to flinch each time your phone rings? Do you dread checking your mail in case it contains another round of collection notices? If so, you’ve experienced another consequence of sustained debt, also known as debt collectors hounding you to pay your outstanding balances.

It’s worth noting that the Fair Debt Collection Practices Act grants consumers certain rights, like the ability to validate debts and request that collectors don’t call you excessively or at inconvenient times. You can even send a cease-and-desist letter to third-party debt collectors requesting they halt future contact with you. Beyond this, they can only legally send you one more informative letter. This does not make your debt go away, but it can buy you some peace while you figure out a repayment strategy.

Consequence #3: Poor Credit

Significant debt starts to erode your credit score. This can affect you in myriad ways, especially when you need to apply for credit down the road. For instance, poor credit makes it difficult to get approved for a mortgage, or perhaps even for a rental unit. If you can get approved for future lines of credit, you’ll pay higher interest rates, which can keep you in debt longer.

If your credit score has already taken a significant hit, it may be worthwhile to explore options like debt settlement. One of the main disadvantages of a debt relief strategy like this is that it will negatively affect your credit score. However, consumers with poor credit who are already receiving collection notices may get more benefit from addressing debt at its root, adverse effects and all. Organizations like Freedom Debt Relief, for example, work to negotiate with creditors after consumers have saved up a sum of money—ideally resulting in a deal that reduces the amount consumers have to pay to zero out their balance owed.

Consequence #4: Worry About Retirement

Americans with debt are more worried about having enough money for retirement than those without debt, at 27 percent compared to 18 percent, respectively. This makes sense, as carrying debt makes it much more difficult to prioritize retirement. Consumers may be tempted to allot the percentage of their paycheck that would usually go into a 401k toward paying off debt because it seems more urgent. However, this strategy is unsustainable as it means you’ll miss out on the benefits of compounding interest.

Consequence #5: Possible Lawsuits

Consumers may face lawsuits for serious debt that goes unpaid beyond a certain amount of time. This process can actually contribute to debt, as you’ll likely need an attorney to navigate these choppy waters.

The consequences of carrying serious debt are mental, physical and financial. Do yourself a favor and do whatever it takes to address your debt before you feel the worst effects.

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