Jump to Main Content

What are the effects of long term debt?

What are the effects of long term debt?


Coping with debt is something many of us will have to do at some point in our lives. Our financial situation can quickly change, meaning a perhaps once easily repayable amount becomes a struggle.

In some cases, what was meant to be a short borrowing period can turn into long term debt spanning over months or even years – as interest causes the amount owed to creep up, making it harder to repay in full.

What is long term debt?

Here at PayPlan, we have many clients who have been repaying debts over a very long period of time. We’d consider long term debt to be one that you have been paying back for years – a repayment that has become a regular factor in your monthly expenses. Besides a mortgage, which is taken out over a long period of time, this kind of debt isn’t ideal.

The longer debt takes to repay, the more you will give back to the creditor than you initially borrowed. Interest and charges will increase the amount you pay. It makes much more sense to look into an effective debt solution to remove this debt and move on – especially if you are struggling to make repayments on time and in full.

How to avoid paying debts over a long period of time

Many people take on debt thinking that they can repay it quickly. However, interest charges or life changes can impact how much they can afford to give to their creditor each month. Here are some ways to reduce the likelihood of lengthy debt repayment periods:

Pay more than the minimum repayment amount

Paying the minimum on a credit card will mean paying less each month but it will significantly extend the amount of time it takes to clear the debt.

Here is an example:

You owe £2,500 on a credit card. You decide to make the minimum repayments and have an interest rate of 17.9% APR to factor in. To clear this debt, making the minimum repayment, it will take you 25 years and 10 months. You will pay £3,270 in interest.

Paying a fixed amount – such as £50 – means it will take just seven years and two months to pay off what you owe. You will only pay £1,777 in interest. Setting up a direct debit to repay a set amount will significantly reduce the length of time it takes to repay a debt and the interest you pay too.

Consider a debt solution

If you are struggling with debt repayments though it may be best to consider a debt solution, which can help you get back on your feet in a shorter amount of time.

What are the benefits of a debt solution?

A debt solution gives you a plan of action and structure when repaying your debts. Depending on which one you choose, it can stop creditors from contacting you and take away the stress of making repayments on time and in full.

You may also receive the support of a debt management company, such as PayPlan, who can guide you through a debt solution. A debt solution is an effective way of tackling debts that you have been making repayments on for a long time.

What debt solutions should you choose?

There are many debt solutions available, but it’s important you do your research to find the right one for you. Here are some examples of debt solutions you could consider:

Debt Management Plan – This solution is popular because it is an informal option. This means neither you or the creditor are bound by its terms, legally. However, this does mean creditors can still take action against you while it is in place. It does allow you to make one manageable monthly repayment though and you continue with it in place until all of the debt is paid off.

Individual Voluntary Arrangement (IVA) – This is an insolvency solution. This means it is a solution for those who cannot afford to pay back their debt when it is due. If you already have long term debt, a debt solution that can take five years to complete may not sound like the best option but it guarantees that at the end of it all you will be debt free and able to start again.

Bankruptcy – For many, bankruptcy is considered to be a final solution. It does have a significant impact on your life – if you own your property or have assets these may need to be sold to release funds to repay debts. However, if you are struggling with long term debt it can be an effective solution.

Debt Relief Order (DRO) – A DRO is a solution for those who do not own their home or have few assets to offer to repay their debts. There are also other criteria to be eligible for a DRO. It works like bankruptcy, taking 12 months and at the end of it your debts will usually be wiped.

It’s best to speak to an expert about which debt solution is best for you. Our team here at PayPlan can offer impartial advice on what would be the best option for your situation. You’ll find their contact details at the end of this guide.

What are the effects of long term debt?

A change in circumstances can cause late payments

Long term debt that was once sustainable can quickly spiral into problem debt if your circumstances change.

This means that any interest you were once dealing with on top of your debt payments may escalate if you miss a payment. Charges will also be added that can significantly increase what you owe. Late payments can quickly lead to other issues, such as defaults and CCJs, if left unresolved.

You may find that you are late making repayments, as you attempt to keep on top of your other priority bills and this knock-on effect will start to be seen on your credit report.

The impact on your credit rating

Late payments can have an effect on your credit rating, as they are listed against your debts and signify that you are unable to keep track of what you owe. Creditors use your credit report to decide whether to accept an application for a loan or credit product and may refuse if your rating is too low or there are late payments.

Pressure to repay these debts can also start to impact your day to day life, not just in a financial manner.

Debt and mental health

There is a strong link between debt and mental health. The longer you have to deal with unmanageable debt the more likely it is that you will develop symptoms of depression and anxiety. We conducted research earlier this year, looking into the effects debt has on people. We discovered that 40% of people who responded said that they felt low when dealing with financial issues and 33% experienced sleepless nights.

This type of feeling, over a long period of time, can have a significant impact on your mental and physical health. Those in debt may find it hard to pursue a career change, feel a sense of purpose or satisfaction in life or even form new relationships – as they feel their debt is holding them back.


This is why, if you need support with your mental health it’s important you find someone to talk to. There are organisations, such as Mind, who may be able to support you – we have more information about the help available here.

Our team at PayPlan are also on hand to help overcome your financial difficulties, give them a call on 0800 316 1833 and receive free, impartial advice for your situation.
0800 316 1833 Request Call Back