Debt Fatigue
A situation where a debtor stops making payments on his debts and starts spending again after being overwhelmed by the amount of debt incurred and the seemingly futility of the debt repayment process (the overall amount of debt owed does not appear to dramatically lessen as payments are made). Experiencing debt fatigue may eventually cause the debtor to declare bankruptcy as a last ditch effort to resolve the situation. Investopedia Says:
One of the worst and most immediate effects of debt fatigue is that the debtor may start to overspend and incur more debt again. Increasing the debt load will not help the debtor's financial situation and is likely to drive the debtor insolvent.
In order to make debt fatigue less likely to occur, a debtor should stop incurring additional debt and also make a repayment plan that allows the debt to be fully repaid sooner than later. By not dragging the debt any longer than necessary, the debtor will start seeing more dramatic results of the debt repayments sooner and not cause him to be demotivated by the overall debt burden. Related Terms:
Bankruptcy
Debtor
Insolvency
Obligation
Repayment |