Commercial Collections Blog

Clients Suffering From Debt Fatigue

How to Identify and Assist Clients Suffering From Debt Fatigue

Clients Debt Fatigue

It should come as no surprise to most that debt fatigue is one of the most pervasive problems afflicting the finance industry today. Borrowers both individual and corporate allow their debt to stack up over time, paying interest without paying off their principal balances. Eventually, many of these borrowers carry their debt for so long that they start to believe that they will never pay it off, As a result, they begin incurring additional debt and spending money that should be going to alleviate their existing financial burden. This debt fatigue often becomes so pronounced that many borrowers eventually declare bankruptcy as a means of resolving their self-perceived debt crisis.

The crux of the debt fatigue issue is not so much that borrowers are actually in debt far beyond their ability to make full repayment, but the fact that they convince themselves that their debt burden is overwhelming. Knowing the signs of debt fatigue and how to help borrowers overcome their mindsets regarding their debt is key to effective and equitable debt collection. Let’s take a look at some strategies for identifying debt fatigue and helping debt fatigued borrowers get back on track with repayment.

Identifying Debt Fatigue

Debt fatigue does not have a specific timeline. Some borrowers make timely payments for years on all outstanding debts without giving any indication that they are struggling, at least in financial terms. However, when an account goes unpaid beyond reasonable expectations and a collection agency is brought onboard to recoup the debt, there are telltale signs that show up in the months leading up to non-payment that can tell you if it is due to debt fatigue or drop in business.

For example, if the borrower runs numerous applications for additional credit, or you find that they have other accounts recently unpaid elsewhere, the chances are that borrower just hit their limit for debt fatigue. They are now attempting to spend more money in the hopes that they will be able to get ahead long enough to make larger payments on existing debt to clear it. Needless to say, this response to debt fatigue only results in further indebtedness and does not resolve existing debts.

In other cases, you may have a borrower who makes regular payments on time all the time without ever clearing the balance. When that account becomes delinquent or goes unpaid for an extended period of time, it is entirely possible that the borrower is simply burned out from the regular drain on their finances and needs a fresh perspective on their repayment plan. Regardless of the reason for debt fatigue, it is time for that borrower to take a step back and re-examine their budget and financial obligations to resolve their situation without resorting to default or bankruptcy.

Lender and Collector Strategies for Helping Borrowers Overcome Debt Fatigue


Priority number one is helping borrowers understand that their debt is not at the point of crisis. Borrowers convince themselves all the time that they no longer have control over their debts and repayment when in reality they just need to reallocate some of their cash flow that is going to other expenses. In personal finance, this means that often borrowers have unbudgeted spending or they are overspending for items and services that are not strictly necessities. With business borrowers, it may involve examining various expenditures every month that could instead be applied towards paying down debt. Better budgeting is key to successfully overcoming debt fatigue and winning the battle in the borrower’s mind.


Once a budget has been worked out, a plan for successful repayment can be organized. Often it is helpful to advise that a borrower focus on paying down their higher interest debts first one at a time instead of attempting to make additional payments on every debt. Planning payments this way allows the borrower to regain control of their debt situation in their mind, and often helps them to rally their motivation enough to throw off their debt fatigue enough to reign in spending and compose a better financial plan for repayment.


Last but not least, every good budget and plan need goals in order to be effective. Help your borrowers create goals for their debt repayment with relatively fixed timelines. When they know in advance what date they can expect to have completely repaid a debt, it becomes much easier to do what is necessary to make full repayment.

Ultimately, whether you are dealing with unpaid accounts as a supplier or non-payment of a loan as a financier, debt fatigue is going to be a factor in getting those accounts back on track at some point in time. Borrowers need to know that they can repay what they owe, but they may need your help to get out of their debt fatigue mindset. Make sure that you can recognize when a client may be struggling with debt fatigue, and do your best to mitigate its effects with budgeting, planning, and goal setting strategies.