There are typically five stages of psychological response to financial difficulties. While you may not experience all of them, or follow them in this order, if you are able to recognise and understand the signs, you should be in a better position to take action.
Stage 1: Denial
People who are in denial about the extent of their debt often refuse to recognise they need help. Typically, they make excuses for their inability to pay their bills. They are inclined to disregard creditors’ calls or payment notices.
Ignoring debt won’t make it go away. It can lead to creditors taking legal action, which can further impact both your financial and mental health.
Stage 2: Stress, Anger and Regret
When people start to realise the problem isn’t going away, financial stress may manifest as insomnia, anxiety and hypertension.
Seeking loans to make ends meet or keep debt collectors at bay only exacerbates the situation.
When their credit profiles start reflecting their perilous financial situation and they’re denied loans, anger and regret set in.
Stage 3: Depression
Confronted at last with the reality of their financial situation, it’s common for people to feel hopeless and desperate.
Anthony says this can be the critical phase for achieving debt acceptance.
“People feel overwhelmed. They’ve exhausted all their options and aren’t sure where to turn. This is when they either do nothing, paralysed by anxiety, or decide to seek help.”
Stage 4: Acceptance
Coming to terms with being over-indebted is a significant step.
“People who recognise they’re over-indebted and unable to solve the problem alone are willing to accept help. This is the breakthrough moment, and the earlier they reach it, the sooner they can begin the journey to financial freedom.”
Stage 5: Resolution
People who’ve taken back control of their finances talk about feeling a sense of relief at having put the anxiety of being over-indebted behind them.
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