The Emotional Stages of Debt

For a lot of people, debt is a lot more than a financial problem.

It is tightly connected to your mental health and your well-being.

Many of our clients who turn to Bankruptcy Canada for help are going through an emotional roller-coaster, which can hinder their ability to make informed decisions.

Indeed, it’s important for people who experience financial difficulties to understand that debt means much more than what they can and can’t afford.

We live in a world that is primarily defined by money.

Your income determines how you live and how you are perceived by others.

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As a result, it’s natural that money, its presence or absence, would affect relationships, family, and self-esteem.

We often meet new clients who are emotionally consumed by debt and worried about how it will affect their children, social circle, and neighbours.

When money becomes a problem, it can transform your whole life.

Debt has the potential to break relationships, trigger a divorce, drive a business to collapse, cause unemployment, aggravate health conditions, etc.

We appreciate that for our clients who seek debt relief, the situation can rapidly get out of control.

But that’s precisely why we feel it’s essential to learn to recognize the emotional stages of debt before it’s too late.

When you are in debt, you grieve for something that has disappeared, your previous lifestyle, your desired life.

Just like the grieving process, making peace with the situation means going through the different emotional stages until you can accept your debt and resolve it.


The mind refuses to accept life-shattering and disturbing news.

Your first response to an adverse situation is to assume that it can’t be true.

Bankruptcy Canada trustees often hear the same story from first-time clients.

They knew or suspected they were accumulating financial issues, but they carried on spending and pretending that the debt didn’t exist.

More often than not, our clients find that they had an awareness of the debt but at the same time couldn’t bring themselves to believe it.

During the denial phase, the debt accumulates and grows out of proportions.

There may already be signs attesting to the severity of the situation, such as creditors taking actions.

Some of our clients in the denial stage have experience calls from collection agencies.

Many have been refused additional credit as banks try to make them aware of the situation.

You may even receive notice of pending legal action from your creditors.


Once the denial stage subsides, an individual in debt progresses to the next step, which is stress.

Stress kicks in as a wake-up call for your financial situation.

Events and notifications that have been ignored until now are taken seriously.

For countless debtors, pending legal actions, notifications of overdue payments, collection agencies, or any other debt-related event that has already happened trigger an anxiety-induced reaction.

During this stage, you worry about how you can repay the debt and, more importantly, how it will affect your family and your life if you can’t.

Debt stress syndrome can cause serious health issues.

Sleepless nights, increased blood pressure, and weakened immune system are some of the most common signs of debt stress taking its toll.

Anxiety becomes overwhelming when people choose to avoid any form of contact.

They can be scared to answer the phone in case it comes from a collection agency.

Mail is left unopened for fear that it could be a demand notice.

Stressed-out debtors often purposefully self-isolate as they become aware of the consequences of the debt.

However, now is the time to face your debt objectively.

Stress can make things appear disproportionate, which is why our trustees insist on creating a budget and calculating exactly how much you owe at this stage.


It’s hard to pinpoint exactly the moment debt happened.

Stress can lead to disproportionately aggressive reactions, as your mind searches for someone to blame.

After fear and anxiety, the next emotion debtors experience is anger.

Anger can target a variety of causes.

Some debtors choose to blame their employer for not paying them enough.

Others decide to turn their anger at banks and financial institutions that charge elevated interest rates.

Interest rates in debt are responsible for making repayments unmanageable.

But it doesn’t matter who you choose to blame.

Ultimately, anger isn’t going to resolve the issue.

On the contrary, it may make it worse and affect your professional and social relationships.

Instead, we recommend taking the time to identify triggers for your debt so you can work to reduce future risks.


Once you have moved through the many emotional stages of debt, you realize that neither denial, fear, or anger can help.

At this stage, debt isn’t an enemy that oppresses you.

It becomes a problem that you wish to manage and control.

People who decide to accept their debt are in a better position to find the support they need to reduce and remove it.

A licensed insolvency trustee, for instance, can provide the guidance debtors need to rebuild their financial stability.

We have found that debtors who have not yet reached the point of acceptance find it hard to objectively talk about financial problems.

They have not yet gained an understanding of their money issues and are still wrapped in emotional grief.

What happens after the 4 emotional stages of debt?

We, at Bankruptcy Canada, believe that debt freedom deserves to be the next step in the emotional stages of debt.

Once an individual reaches out to a trustee, we can help manage your financial situation through real and practical solutions.

A trustee can administer bankruptcy and consumer proposals to provide debt forgiveness to clients who can’t pay off their debt in full.

Alternatively, debt restructuring and debt management plans can also provide the financial breathing room people need to pay the whole debt.

With over 430 trustee offices in Canada, we have helped 200,000 Canadians achieve their financial goal and become debt-free.

Don’t let debt steal your sleep.

Our understanding insolvency experts at Bankruptcy Canada are there to help you regain financial stability after the emotional stages of debt.

We know that everyone needs time, so when you are ready, call us at (877) 879-4770. 

Gordon Sands

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