Ignoring Your Debt: A Guide to Debt Denial’s Negative Impact on Your Credit Health & Financial Wellbeing

By Melanie Lockert
June 10, 2017

One of the most common symptoms of being in debt is denial. You might know you owe money, but it’s easier to remain blissfully ignorant. I should know. When I graduated with my M.A. in 2011, I knew I’d borrowed a lot of student loans, but wasn’t really sure how much I owed. I just knew that I made payments for five years and that when I decided to go to NYU for grad school, I took on even more debt.

It wasn’t until after graduation that I knew something had to give. I downloaded a budgeting and money managing app, linked my accounts, and realized that after making payments for five years, I still owed a whopping $68,000. I felt a sinking feeling in the pit of my stomach.

After realizing how deeply in deep I was, I deleted my budgeting app and I was in complete and total denial. I couldn’t face the reality of my debt and it was easier to go back to ignorance. If you’re feeling the same way, read on to learn why denial is so common, how much it can cost you and how you can reclaim your financial life.

More often than not, denial and debt can go hand in hand. When you’re not mindful of your financial situation, this can cost you – big time. Facing debt head-on, however, is tough and requires facing the facts, but the reward is well worth the effort.

What Happens When You Ignore Your Debt? 

Ignoring your debt can come in many forms.

On a smaller scale, you might not realize just how much you owe. You may be buried in credit card debt, paying only the minimum and thinking it’s sufficient. Doing so could mean many years of repayment and paying much more than you borrowed because of high interest rates.

On a larger scale, ignoring your debt can lead to avoidance. The bills keep coming in and you ignore them. Past due notices arrive and remain unopened, and soon enough you begin receiving calls from debt collectors call and you find yourself being hounded. If you’re in credit card debt, your credit is shot and your creditors may take action. If you’re ignoring your student loans, your wages could be garnished in order to repay the loans.

The thing about denial is that the truth will always come and find you — even if you don’t want to face it. No matter how much you try to avoid something, there it is. That’s why it’s crucial to face your debt head on, if you want to get your financial life under control.

How to Stop Ignoring Your Debt & Rebuild Your Finances

I often equate getting out of debt with the “5 stages of grief” — denial, anger, bargaining, depression, and acceptance. Having paid off a total of $81,000 in student loan debt, I know about this first-hand as I went through all of these emotional states. Although denial is powerful, you can’t move forward unless you move past it. But how can you get out of denial without losing your mind?

The first step is to face the numbers with a heavy dose of self-compassion. Begin by logging in to all your loan servicer’s and creditors’ accounts and writing down each total and the corresponding interest rate. If the bill is in collections, contact the lender and ask them to provide the contact information for the collection agency they use so that you can track down your debt.

Next up: add up all of your debt and let the number sink in. Take a deep breath and don’t panic. It can be tough to swallow, but the world isn’t going to end.

The next step is to create a plan of action. Look at your minimum payments and see how much more you can put toward your debt each month. Minimum payments are just that — the very minimum, but this won’t get you out of debt quickly. Taking action is the best way to combat denial.

Stick with this as. After a while, you’ll start to see progress. And progress can be addictive and used to your advantage!

The Mental Health Benefits of Getting Out of Debt

Being in denial of your debt is often easier than facing the overwhelming burden of paying it off, but ignoring it won’t make it go away. In order to avoid trouble with creditors and bill collectors, protect your credit score and reclaim your financial future, it’s crucial to get out of denial and ditch debt – forever. Your freedom is priceless.

Melanie Lockert is the founder of the blog and author of the book, Dear Debt. Her work has appeared on Business Insider, Time, Huffington Post and more. She is also the co-founder of the Lola Retreat, which helps bold women face their fears, own their dreams and figure out a plan to be in control of their finances.

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