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Signs you have a debt problem

Signs of debt
(Image credit: Getty)

Financial debt can be complicated and cause a lot of stress, which can have a real effect on your daily life. Whether it's a short-term credit card or a personal loan (opens in new tab) to see you through, most of us have some sort of debt. However, using too much of our credit facilities, opening a variety of credit options in a short period of time, or being tempted by the best payday loans (opens in new tab) can be a sign of a worrying financial instability. Not only is that a strain financially, but it can hit you hard emotionally too. 

From hiding debt to not being able to pay basic bills, if you think you may be in trouble with debts, these are some signs that you may have a problem. If you recognize a whole bunch of these, you should start to consider contacting the best debt consolidation companies (opens in new tab) or, if you identify with all the below, the best debt settlement companies (opens in new tab) may be for you.

1. You only make minimum payments

When it comes to paying off credit cards (opens in new tab), the sooner you can clear the debt the better. While most companies will offer a low minimum monthly repayment amount, it is important to note that this just covers the covers monthly interest charges and not the amount you actually owe. If you repeatedly find yourself only being able to meet minimum repayments then it could be a sign that you have taken on too much debt.

2. You are late with payments

If you are struggling with debt, you might find yourself being late with payments. Keeping on top of various creditors can be exhausting, coupled with a monthly struggle for cash flow could be an indicator that you may have more debt than you can cope with.

Top debt settlement provider

National Debt Relief is our top pick of debt settlement providers. As well as providing debt settlement, their debt councilors will also help you understand your debt management options.

3. Your cards are maxed out

If you have problems with debt you might find that you have used all your available funds. It may be better to spread your debt across multiple providers rather than maxing out what you have. Then again, relying on multiple cards that have reached their limit can be damaging to your credit score, so getting those back in check is really important.

4. You feel on edge about your finances

When people develop a debt problem it can affect their emotional wellbeing leading to stress and anxiety. You might find yourself struggling to sleep, or constantly thinking about money. The reality is, if you think you have taken out more debt than you can handle, chances are you have.

5. You spend too much on interest

If you have taken out a large amount of debt, you might find yourself spending more than 20% of your monthly income on paying off interest. These payments do not go towards the cost of your debt, just the interest, so spending a lot on them each month can be damaging to your ability to pay off the debts themselves.

6. You hide your debt from loved ones

People who have debt problems often hide their finances from their loved ones. This can mean that you hide bills when they are delivered, throw away bank statements, or don’t admit that you have paid for certain things with credit.

7. You don’t know how much you owe

A common indicator of having a debt problem is not knowing your own financial situation very well. It can be tempting to ignore the potential problem and take an approach of ‘what you don’t know can’t harm you’. However, not knowing exactly what you owe and to whom can make managing debts difficult. 

8. You have borrowed to pay bills

Those with debt problems often find themselves having to borrow more money to be able to meet their basic needs. If you have a debt problem, you may have found yourself taking out extra credit to pay for basic utility bills and gas. Not being able to pay these important monthly bills is a strong indicator that you may have a debt problem. Some might even consider using a payday loan to 

9. You have been turned down for credit

Your credit score is an indicator that lenders use to see how much of a safe bet you are when it comes back to paying back your line of credit on time. If you have more debt than you can afford your credit score will be low. Creditors will often not lend to people with bad credit, because they are less likely to be paid back on time.

Not paying your monthly bills on time will also leave a black mark and your credit file that will take years to drop off. If you have applied for a loan or credit card and have been denied, then you may have a debt problem.

10. You don’t have any savings

If you have a debt problem, putting money into a savings account is probably the last thing on your mind. If you find you have no savings and are unable to add money to a savings account each month, then you may have a problem.

11. You are receiving calls from debt collectors

If you have been struggling to meet minimum repayments on credit cards, or failing to pay utility bills, you may find yourself receiving calls from debt-collection companies. These companies work for the people you owe money to, and will contact you to chase payments. If you are receiving calls from companies like this it can be an indicator that you are spending beyond your means.

Take control of your finances

If you find yourself in any of these scenarios, then it may be time to take control of your finances and evaluate your credit score. There are services available for people who have had trouble managing their money, and options such as debt consolidation could be an appropriate next step depending on your situation. We also have advice on how to borrow money (opens in new tab), and a look at the best credit repair services (opens in new tab).

Overall there are many ways to get back on track, even if you may feel like it’s impossible. A good first step is to go through your finances carefully to determine exactly how much you owe. Once you know how much you owe, and who you owe it to, then you can work on getting your finances back in order.

National Debt Relief

National Debt Relief ranks top of our list of best debt settlement companies. Its debt advisors help you understand your options and, if you choose to use their services, we've found they can help reduce your debt.

Gina Clarke has worked in journalism for over a decade for titles such as The Daily Mail, The Sun and Forbes. She began her career in BBC radio and now specialises in subjects such as financial technology and women’s health. She has written for the Top Ten Reviews brand on a number of different and varied topics.