Search Investopedia

Debt Fatigue

Filed Under »
Dictionary Says

Definition of 'Debt Fatigue'

When a debtor stops making payments on his or her debts and starts spending again after being overwhelmed by the amount of debt incurred and the seeming 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

Investopedia explains 'Debt Fatigue'

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 to insolvency.

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 rather than later. By not dragging the debt out any longer than necessary, the debtor will start seeing more dramatic results of the debt repayments sooner, preventing him or her from becoming unmotivated by the overall debt burden.

Video Definition

Related Definitions

  •

    Debtor

    A company or individual who owes money. If the debt is in the form of a loan from a financial institution, the debtor is referred to as a borrower. If the debt is in the form of ...
    Read More »

  • Repayment

    The act of paying back money previously borrowed from a lender. Repayment usually takes the form of periodic payments that normally include part principal plus interest in each payment. ...
    Read More »

  • Insolvency

    When an individual or organization can no longer meet its financial obligations with its lender or lenders as debts become due. Insolvency can lead to insolvency proceedings, in which ...
    Read More »

    • Bankruptcy

      A legal proceeding involving a person or business that is unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor (most common) or on behalf ...
      Read More »

    • Obligation

      The legal responsibility to meet the terms of a contract. If the obligation is not met there is often recourse for the other party to the contract.
      Read More »

    • Cancellation Of Debt - COD

      When a creditor forgives a debt without requiring consideration in return. The amount of debt that is forgiven by cancellation of debt is considered income to the debtor and must be ...
      Read More »

    • Peak Debt

      The point at which a household or economy's interest payments become so high compared to income that a halt in spending must occur. This is followed by a period of debt reduction.
      Read More »

    • Debt Collector

      A company or agency that is in the business of recovering money that is owed on delinquent accounts. Many debt collectors are hired by companies to which money is owed by debtors, ...
      Read More »

Articles Of Interest

Sponsored links
Hot Definitions
Partner Links
Suggested Definitions