Consequences of Being in Debt You Didn’t Know About: Psychological and Financial
Debt is an all-too-common burden for many individuals and families in Canada. While the financial pressures of debt are widely acknowledged, there are numerous lesser-known consequences that can significantly impact various aspects of your life, both emotionally and practically. In this article, we will explore several of these repercussions, highlighting how debt can infiltrate your personal relationships, mental health, and everyday living.
Wage Garnishment
One of the more drastic consequences of being in debt is wage garnishment.
This legal procedure allows creditors to collect on debts by taking a portion of your income directly from your paycheck. This will be done if you owe the creditor but have yet to repay your debt after several warnings.
When wage garnishment happens, you’ll have less money to deal with essential everyday expenses, which can cause you to take on more debt. It also hinders your ability to save money.
Your financial situation and obligations will be considered when the court decides what portion of your wages can be taken. However, this doesn’t make your situation easier, especially if you’ve already been struggling with day-to-day spending.
Read More: How to Stop Wage Garnishment (Before and After it Starts)
Difficulty Finding Housing
Did you know that debt has a major impact on your ability to secure housing in Canada?
When it comes to renting, landlords frequently conduct credit checks as part of the rental application process. They use this information to assess your ability to pay your rent consistently. A poor credit rating, often compounded by high levels of debt, will cause many landlords to reject your application outright.
In order to have somewhere to live, you might have to settle for less desirable living arrangements or higher rental costs due to your increased risk as a renter.
Read More: Filing for Bankruptcy as a Renter in Canada
Additionally, if you plan to purchase a home in the near future, high debts will make this significantly harder. Not only will you need to account for a large down payment, but your creditworthiness also has an impact on the mortgage rates available to you. Some lenders could refuse to lend to you at all, or lend to you with unfavourable terms that include high interest rates.
You’re Unable to Retire
As you continue to carry debt throughout your life, it becomes harder and harder to save towards future financial goals. This can affect a variety of your financial aspirations, but the most severe one is your ability to retire.
Many Canadians in the workforce hope to retire one day, some even aspire to retire early, but this is only possible if you’re able to save money consistently. Today, many Canadians continue to work past retirement age to stay afloat, but continuing to work throughout your senior years becomes less realistic as your health deteriorates.
Relationship Troubles
One of the hardest things to grapple with when in debt is the impact it has on your relationships. From family relationships to your romantic relationships, debt troubles often affect more than just yourself.
Money issues are a frequent source of conflict among couples, leading to arguments, misunderstandings, and resentment. A 2025 survey found that almost half of Canadians surveyed have had financial disagreements with their partner. The same survey states that 1 in 10 Canadians say financial stress has made them consider leaving their partner.
When debt is a persistent worry, partners find it difficult to communicate about financial goals and responsibilities, placing a significant strain on the relationship. As you both collectively stress about money problems, it leads to less time and energy spent on growing and maintaining your relationship.
Beyond romantic partners, relationships with family and friends can also suffer. Feelings of embarrassment or failure might prevent individuals from seeking support, further isolating them and creating emotional distance between them and their loved ones. If left unresolved, these tensions could lead to more severe relationship breakdowns.
Declining Mental Health
The stress of managing debt takes a serious toll on your mental well-being. Although you may assume your finances and mental wellbeing are separate from each other, in a world where your financial health dictates your ability to live, they often go hand-in-hand.
Constantly worrying about unpaid bills, mounting interest, and collection actions like wage garnishments can lead to chronic anxiety, depression, or high levels of stress. This impairs your ability to focus, make decisions, and carry out daily activities, even affecting your work life.
Additionally, deteriorating mental health often sparks avoidance behaviours. Avoidance often causes individuals to disregard their financial situation altogether. This leads to poor financial decisions, making your situation even more stressful and overwhelming.
Recovering from debt is incredibly hard. It requires commitment, dedication, and discipline, and maintaining this attitude can feel impossible when you’re struggling with your mental health.
Ask 4 Pillars about Canada’s Debt Relief Options
If there’s one thing I’d like to tell every Canadian struggling financially, it’s that THERE IS HOPE!
We’ve helped thousands of Canadians pull themselves out of a debt hole — one they thought they could never get out of. We achieve this with a consumer-first approach that prioritizes your needs over any creditor that you might owe.
Our goal is to get you out of debt and keep you out. We do this through our financial literacy programs and an overview of your debt relief options. The debt industry is confusing and complex, leaving many Canadians struggling to understand the facts and their rights.
We’ve studied the ins-and-outs of federally-regulated debt relief options like consumer proposals and bankruptcies so that we can keep you informed.
If you’ve ever felt completely lost, confused, and hopeless, we ask for just an hour of your time to show you why the path out of debt isn’t out of reach.
