The problems caused by excessive debt can be subtle, but they often cause considerable damage to the debtor's life and finances. Getting into debt can be very easy -- simply run up a lot of bills on a credit card or take out a high interest loan -- but getting out of it can take years and push your resources to the limit. Be aware of the problems caused by severe debt before you take it on.
Denial of Credit
When you ring up a lot of debt, it tends to make it much harder to get new lines of credit, since creditors will likely be skeptical of your ability to pay it all back. This can cause serious problems when you need money for a significant purchase such as a car or a house, or if an emergency arises requiring a great deal of money.
Lower Credit Score
Your credit score depends to a certain extent on the amount of debt you carry. If you carry a large amount of debt or have debt from multiple sources, your credit score will drop, which translates into higher interest rates on credit cards, higher deposits on utilities and even a reduced ability to secure an apartment or a job.
Stress
Perhaps the biggest problem caused by excessive debt is the effect it has on your peace of mind. Increased stress caused by worry can lead to sleeplessness, lack of energy troubles with relationships and reduced self-esteem. These problems often only get worse when the amount of the debt increases.
Forced Repayment
If you don't meet the terms upon which you agreed when you took on the debt, then your creditor may be able to sue you in order to get back his money. If he wins the case, he can ask the court to place liens on your property, seize your assets or garnishee your wages, which involves taking a certain amount directly out of your paycheck every month.
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