Home Business Insights & Advice Psychological ramifications of defaulting on repayments

Psychological ramifications of defaulting on repayments

by John Saunders
30th Jan 20 1:00 pm

A drop in the levels of your serotonin comes unannounced and often without a warning. But, there are always triggers that can unleash hell on your mental health and send you down a rabbit hole. While some of these triggers are internal and not egged on by the external factors in your life, some of them are extrinsic and determined by the situation you find yourself in.

One of those extrinsic situations that can act as a trigger is a rapidly degrading financial situation or a sudden and cataclysmic turn of events in your financial life. Piling up debts and becoming a loan defaulter are events that can lead to a massive case of psychosis even to the healthiest of brains. Situations, where one finds himself/herself in a financial crunch, can lead to several physical and mental health issues, and most of those could be arduous to battle through. Recovery does not have a straight curve, and when the financial fore looks bleak, with webs of legal complication being spun out every second, the battle becomes all the more challenging. With this view mind, we shall now look into the possible psychological ramifications of becoming a loan defaulter and then move on to looking at the various ways to navigate the situation.

Anxiety and stress

Anxiety and stress must not be seen as two mutually exclusive concepts but as a singular entity. Debt situations getting out of hand can nudge your body towards excessive stress and eventually give rise to the condition of acute anxiety disorder. While stress is your body’s natural reaction to fight a taxing situation, too much of anything is bad, and a dilapidating financial condition can lead to the said disorder. Once you fail to make your payments on time, you might continuously find yourself in situations where your debts keep piling up. And even before you know, you shall be caught up in the vicious cycle of debt.

How to avoid getting further into debt

The very first thing that you need to do if you want to avoid situations of anxiety resulting from debt is to be aware of the deadlines of your payments. You cannot afford to miss out on any deadline since it is only going to put pressure on you for the next term of payment. Plus, there will always be an amount charged as fine if you happen to tamper with your timeline of payments.

In cases where your mental health might have already taken a hit, and you have become a defaulter, you must try to devise ways of containing the damage. You could start off by looking for alternate methods of earning cash, seeking help from therapy and talking to a trusted source for some wise counsel. Talking your heart out can save you from corroding your mental health further, and you might even find effective ways to clear off your debts. You can also use iva debt advice to come up with effective ways of handling a debt situation.

Depression and mood disorder

Acute clinical depression is more than just being sad. It is not a phase and definitely not something that you can get over in a week or so. Acute clinical depression can result when there is a sharp drop in the serotonin level in the brain. In the wake of a debt debacle in your life, it is often possible for you to recoil and spiral into a bottomless pit of nothingness. The legal complications that accompany such situations result in severe mental health disorders, and depression and mood disorders are just instances of those. If this is what you find yourself in, it is required that you take all the necessary steps to mitigate the debacle while also seeking help for your worsening mental health.

What must you do?

Let us begin by saying that you need to try avoiding a situation where you become a loan defaulter. The most critical element here is understanding your income and your budget constraint. There is no point applying for loans where you are required to pay EMIs more than what you can afford every month. Therefore, be careful about the principal amount you are applying for and calculate your EMIs cautiously. Do not fill your plate with more than what you can eat.
In the scenario where you have already suffered from one or more recurrent episodes of depression, it is important that you seek professional help as soon as you can and look for medical intervention if necessary. There is no shame in having a mental health disorder and reaching out in time is necessary if you are to save lives.

Conclusion

Being a defaulter and having a debt situation spiral out of hands is not just something that can give rise to legal trouble, but can also result in severe mental health disorders. Therefore, you must be very careful about the way you go about applying for loans and must be aware of the deadlines to avoid a debacle.

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