Date

May 7, 2025

Signs debt is affecting your mental health

Debt is more than a financial burden; it can weigh heavily on mental health. The first step to alleviate that stress is to talk about it. We explore the effects of debt on mental health here.

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Signs debt is affecting your mental health

Young woman in bed alone, worried and contemplating

Debt is more than a financial burden; it can weigh heavily on mental health. The stress of managing overdue bills, mounting interest rates, and creditor calls can disrupt daily life and create a sense of constant anxiety. Studies consistently show a strong link between debt and mental health challenges, including stress, depression, and anxiety disorders. 

Feelings of shame or guilt about financial struggles can also lead to isolation, as many people hesitate to seek help or share their worries with loved ones. With this being such a common issue, let’s look at the sign’s debt is affecting your mental health.

1. Lack of sleep

Almost half of Canadians, 48% of us, have lost sleep due to financial worries, according to the Financial Consumer Agency of Canada

It’s likely one of the most common signs that debt is hurting your mental wellbeing.

When you’re faced with mounting bills or calls from creditors, the stress can make it difficult to relax and fall asleep. Thoughts of how to make ends meet or avoid late payments often take over during the night, leading to restless or interrupted sleep.

The inability to relax and fall asleep due to financial concerns can result in a range of negative effects, such as increased irritability, difficulty concentrating during the day, and a decline in overall mental and physical health.

It’s also essential to address the root cause of the financial stress that’s giving you sleepless nights. Seeking support from a Licensed Insolvency Trustee can provide clarity and options for tackling debt. 

Improving sleep starts with prioritizing self-care and asking for help when needed. Professional guidance not only reduces debt-related stress but can also help create a path to better overall wellbeing, including the restorative sleep needed to face each day with energy and focus.

2. Ongoing stress

If your debt is causing you ongoing stress issues, you’re far from being alone. 38% of Canadians stress about their personal finances on a weekly basis, according to a 2024 survey by RBC.

Persistent stress can be a clear sign that debt is taking a toll on your mental health. Financial worries often create a sense of unease that doesn’t go away, leading to feelings of constant anxiety. This stress can manifest in various ways, such as difficulty focusing, irritability, or even physical symptoms like headaches and fatigue.

The weight of these fears can lead to feelings of helplessness or isolation, as if no one else understands the challenges being faced.

Recognizing ongoing stress as a signal of deeper financial concerns is an important first step to finding help. Opening up to a trusted advisor or exploring professional guidance with a Licensed Insolvency Trustee can help alleviate these fears and create a path toward financial security.

Struggling with debt stress? We can help.

3. Depression

Debt can often lead to feelings of depression, particularly when financial challenges seem insurmountable. Depression often stems from the hopelessness that debt can create, making it feel as if there’s no way forward. This emotional weight can manifest in a variety of ways, such as trouble getting out of bed in the morning, losing interest in activities that once brought joy, or feeling constantly fatigued.

Other signs of depression might include changes in appetite or difficulty concentrating. Persistent negative thoughts—such as guilt over financial mistakes, shame about debt, or fear of judgment—can deepen the emotional strain. Over time, these feelings may lead to a sense of paralysis, where it becomes difficult to take any action to address the debt or improve the situation.

The connection between debt and depression is real and can impact every facet of life, from relationships to career goals. Recognizing these feelings is crucial. Seeking professional help, whether from a mental health counselor or financial expert, can provide a path forward.

4. Social avoidance

Debt can lead to a pattern of social avoidance, where financial stress makes connecting with others feel impossible. This can often happen if you have debt and are living paycheque-to-paycheque

The idea of attending a social event, especially one that involves spending money, becomes overwhelming for many in this situation. Declining invitations to dinner, skipping group outings, or avoiding celebrations can start to feel like the only option when trying to stick to a tight budget.

This withdrawal can create a deep sense of isolation, cutting people off from their support systems at a time when they may need it most. Feelings of shame about having debt or fear of being judged can intensify this isolation, making it harder to reach out or explain the situation to friends or family.

Recognizing this behaviour is the first step toward addressing it. Building open conversations with trusted loved ones or seeking support from a financial expert can help reduce the burden. Connecting with others doesn’t always have to cost money, and leaning on supportive relationships can be a vital part of regaining emotional and financial wellbeing.

5. Anxiety

Debt can often trigger overwhelming anxiety, creating a persistent sense of dread that affects both the mind and body. Financial worries can lead to racing thoughts about missed payments, fear of mounting interest, or panic over the possibility of losing essential assets like a home or car. 

Anxiety manifests in everyday life in various ways, some might even experience physical symptoms like headaches, a racing heart, or an upset stomach when thinking about their financial situation. Even simple activities, such as grocery shopping or opening the mail, can become stress-inducing tasks.

This constant state of hypervigilance not only disrupts daily routines but can also strain relationships and lower overall quality of life. 

Seeking support from a Licensed Insolvency Trustee can help reduce the uncertainty driving anxiety, while professional mental health resources can provide tools for managing the emotional toll.

If you want to stop the stress, we can help

Living with debt-related stress can feel overwhelming but taking the first step toward a solution can bring immediate relief. Licensed Insolvency Trustees (LITs) at BDO are experts in helping Canadians navigate debt challenges. Their judgment-free approach ensures a safe space where concerns can be shared openly, without fear of criticism.

LITs are federally regulated professionals, ethically bound to provide advice tailored to each person’s unique situation. 

The first consultation is always free, and you’ll get to find out all the debt solutions available to you. The LIT will explain what each option means and the pros and cons for your situation.

Speaking with an LIT isn’t just about addressing debt; it’s about relieving the stress that comes with it. By exploring options and creating a plan, financial burdens can become manageable, and your stress will be a thing of the past. 

Do you have more questions?

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Date

May 7, 2025

Signs debt is affecting your mental health

Debt is more than a financial burden; it can weigh heavily on mental health. The first step to alleviate that stress is to talk about it. We explore the effects of debt on mental health here.

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