Addiction Related Debt

Dealing with Addiction Related Debt

Hope for Healing the Household Financial Disorder

If you’ve been around the debt management and credit counseling industry as long as I have, you notice patterns. When it comes to addictions and debt, I’ve noticed that self-reported debts related to addiction are few and far between while conversations with spouses and family members dealing with debt resulting from addictions occur much more frequently. Historically, debts with their origins in addictions have been strongly underreported. Regardless, their consequences can devastate a household and a family.

How can you get rid of debt caused by addictions?

Dealing with addiction-related debt starts with getting help for the individual, then protecting the household from further debt, followed by getting a realistic picture of the household debt, and finally using the household income and resources to accelerate the debt elimination.

While all debt types are owed money, not all debts come with the same potential to disrupt or even devastate family life. For that reason, some debts resulting from addictions should take precedence over others in the household’s efforts to pay them off.

Additionally, certain debts are more common among those with addictions than others. In fact, some types of debt can serve family members as indicative of the presence or the return of an addiction.

Fortunately, while nothing is guaranteed when it comes to addictions and money, many professional services, community resources, and online tools exist to help the family and loved ones of those with addictions address and even recover from the financial turmoil of their shared experiences.

Recognizing the Signs of Addictions and Debt 

Regrettably, by the time many family members and friends find out about their loved one’s addiction, savings have already disappeared, and debts have already piled up. While the person recognizes at times in their cycle that they want to change, the addiction continues to drive them to hide the effects of their actions.

This includes not talking about their purchases or how they get the money that fuels the addition. They may spend every penny of their paycheck, no matter how large it is. They may drain the household’s savings hoping no one checks the balance or hoping to somehow rebuild it before anyone notices. They may open credit cards and max them out. Some even turn to payday loans, pawning valuables, or even taking out a car title loan that must be repaid within a month.

Then, unfortunately, there are those whose addiction is so powerful that they may even take out home equity loans or lines of credit, putting their home at risk of foreclosure when they can’t repay it as agreed. Further down the path, some begin taking out credit cards using the name and social security numbers of their spouses, partners, siblings, parents, and even children. The addiction’s hold is so strong that it overpowers any concern for future negative consequences.

Sometimes, once they have exhausted all other options, the person may turn to defrauding strangers, selling illegal substances, committing robbery, or even turning to prostitution, to name a few common behaviors they would previously have thought impossible.

Unfortunately, addictions can take such complete control over the individual that they lose all hope for recovery. Death by suicide, whether accidental or not, is often the final chapter of the individual’s struggle with addiction.

None of this is to say the person has no conscience or no self-discipline, but their willpower alone is no match for their addiction. For those closest to them, the addiction can lead to financial devastation.

Make the Household Finances a Team Thing 

Whether you suspect an addiction or not, you and your spouse or partner should be open and honest with your money. If you don’t share everything 50/50, you should not have money secrets. Ways to stay involved and create a financial partnership in your relationship could include:

  • Pulling and reviewing your credit reports together every four months (through

  • Have a 15-minute weekly financial huddle to review your goals, identify upcoming bills, and confirm current account balances.

  • Sign up with free services like CreditKarma, CreditWise, or CreditSesame that send you notifications via email about any changes to your credit report, including new accounts and major changes to balances.

Stay Vigilant for Major, Unexpected Purchases or Changes to Debt Balances 

While not exclusive to situations where addictions get involved, large, unexpected purchases or account balance changes should be discussed and resolved. With addictions, though, you’re likely to notice not just one maxed-out credit card account but multiple credit cards with maximum balances. You’ll begin to see a pattern of seemingly uncontrolled debts rather than a single impulse purchase.

Even if the balance is not maxed yet, credit card cash advances can also indicate financial problems. Cash transactions are easy to hide or justify, but recurring cash advances should be a call to action.

When items of value begin disappearing without explanation, you need to find out why. Pawning personal and household valuables is an easy, if not financially prudent, way of getting cash for addictions.

Taking out any type of loan with exceptionally high-interest rates could be the actions of someone with an addiction frantically reaching for any cash possible. Pawn loans typically carry interest rates between 50% and 100% APR (3 to 6 times higher than the average credit card). Car title loans often have interest rates between 100% and 200%, while payday loans range from 400% to over 800% APR.

If you are surprised to learn that your loved one has also taken out a personal loan (often called a “signature loan”) without any explanation, you might begin suspecting an addiction is involved.

Except for pawn loans, payday loans, and car title loans, all of these other types of debts should appear on your loved one’s credit report. If the debt is brand new, it may not appear under the “tradelines” section that details the account information, but there should certainly be a listing for the account application under the credit report’s “Inquiries” section.

Anger over Questions about Personal Finance 

Another tell-tale way addictions in the household manifest themselves involves strong, emotional, and often angry outbursts over questions or inquiries – often simple or even innocent – about the individual’s finances.

Abusive Behavior 

There are many behaviors in relationships that, taken as a whole, seem to indicate the presence of an addiction. The person with the addiction may become verbally and emotionally or even physically abusive as a consequence of trying to blame others or deflect attention from their own situation.

Type of Addictions that Lead to Excessive Consumer Debt

While all addictions can lead to overspending and even excessive debt, some addictions take a greater financial toll on households and individuals than others.

Alcoholism and substance abuse often create situations where the individual struggles to maintain employment, resulting in long-term poverty not to mention lasting debt.

Additionally, gambling – and especially online gambling – tends to result in massive amounts of personal and household debt as the individual continually justifies their spending by believing their luck is about to change. In reality, their financial situation will likely lead to years or decades of financial ruin, missed opportunities, and broken relationships.

While gambling addictions certainly exist on the casino floor, most visitors will lose on impulse during a weekend trip, perhaps even lose big, and then resume their routine back home, hopefully, a little wiser for the experience. Casinos exist to extract money from their “guests,” but they also recognize that an overindebted player can’t keep it up over the long term.

While all addictions have a higher-than-average suicide rate among their victims, it may surprise people to learn that the rate of suicide among those with gambling addictions is twice the rate among those with other addictions.

Although it sounds almost quaint and cute because of popular movies and books, the addiction to spending money makes the list of those that lead to overwhelming consumer debt. Retail therapy is just one sign of potential addiction. If the consumer also binge shops regularly, purchases things they don’t need and can’t afford, and attempts to hide their purchases for fear of what others might think, they likely have an addiction.

Shopping addictions quickly result in numerous maxed-out store cards and credit cards. When credit card and store cards hit their limits, the shopper may take out loans and lines of credit to pay off their cards so they can continue to shop in the future.

Get Help for the Addiction First 

Regardless of the type of addiction or the amount of debt incurred, your first step to getting the help you or another should probably involve reaching out. Addictions by definition overwhelm your personal commitment to make changes.

Dealing with the addiction first will start to shut off the debt at its source. To find help near you, reach out to the Substance Abuse and Mental Health Services Administration (SAMHSA) National Helpline:

Text: Send your ZIP code to 435748 to find local help now


Phone: 800-662-4357

Minimizing Further Financial Damage from Addictions

Although the financial fallout of addictions can feel life-shattering, you can find both options and resources.

Deal with the Cards 

First, as soon as you and your loved one come to terms with the presence of addiction and have sought help, you should discuss the possibility of hiding your credit cards, cutting them up, or even closing the accounts. Someone with an addiction will figure out how to get a replacement credit card or even how to reopen accounts if they’re motivated. However, getting rid of the cards is a quick and somewhat effective way to deter the loved one from incurrent additional debt in the short term.

Freeze Your Credit Reports 

Next, you might consider freezing both your credit reports. By freezing your credit reports, you place another barrier, even if not insurmountable, between your loved one and the addiction. No new credit cards, store cards, or loans will be approved if there is a freeze on your credit report.

With a frozen credit report, you can continue to use your current cards, continue to build or rebuild your credit rating, continue to pull your own credit report for review, and still make payments on your accounts. However, creditors can’t process new applications. The exceptions include any lender who doesn’t check your credit during the application process, from payday and pawn lenders to car title lenders and even some online personal loan providers.

To freeze your reports, go directly to the three main consumer reporting agencies and look for their security freeze portal: Equifax, Experian, and TransUnion.

Involve Your Bank or Credit Union 

You might also call your bank or credit union to set up a private meeting with the branch manager. When asked you can simply tell them it’s a private banking matter you need help with that you would prefer to discuss directly.

During the conversation, identify the addiction and its financial fallout. The manager may already be aware of the financial challenges if the addiction has resulted in multiple overdrafts or maxed-out credit limits. Ask about tools, products, limits, or notifications the financial institution might be able to place on your accounts. Also, for obvious reasons, you might consider moving to a pre-paid credit card or a secured credit card rather than using untraceable cash.

Deal with the Debt 

Once you have stemmed the tide and feel you’re in a position to start dealing with the debts that resulted from the addiction, you have several options to consider, along with some necessary steps.

First, of all, pull your credit reports at to make sure you have a broad understanding of all the debts your household owes.

Next, identify your current household income available for making debt payments. You might also consider the possibilities of getting a part-time job or developing a side hustle to increase your household income and, thus, your debt acceleration plan.

Then, contact your creditors and ask for lower interest rates. Be open and honest about your situation, including the steps you are taking to repay the debts and avoid bankruptcy. You might also request a waiver of any late or annual fees. Credit card companies actually grant such requests much more than half the time, so it won’t hurt to ask.

With a better idea of your available income and your monthly debt payments, you can now prepare a debt elimination plan that works best for you.

Do-It-Yourself Debt Relief 

Many households start with a do-it-yourself approach that requires you to send an extra payment each month to your top priority debt. See our pages here for more information on DIY options.

Credit Counseling Debt Relief 

If the do-it-yourself debt reduction approach doesn’t work for you (perhaps the monthly payments are still too high, the creditors won’t lower their interest rates, or there are too many accounts to deal with), your next step would involve reaching out to a nonprofit credit counseling agency (CCA) like Money Fit. CCAs work with creditors of all sorts to lower interest rates and offer you a single monthly payment.


If these methods don’t appear to work for you, you might consider meeting with a bankruptcy attorney. Bankruptcy is never an easy process to go through, but it exists for a reason. It helps protect your most important assets, particularly your home and your income, from creditors seeking either foreclosure or wage garnishments.

Since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made it a requirement for bankruptcy filers to first meet with an approved nonprofit credit counseling agency for a budget briefing, you may want to start with a credit counseling agency first anyway.

Just as dealing with an addiction requires your time and commitment, getting yourself and your household to debt freedom will also demand a lot of effort on your part. Don’t give up. Keep trying, and reach out to professionals when you need support.

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Related Questions 

Can you be addicted to debt?

If the behavior involves uncontrolled usage regardless of likely harmful consequences, then it’s an addiction. Addictions do not discriminate. Some people will feel an addiction to debt, just as others will feel an addiction to smoking or to consuming chocolate.

Can you file bankruptcy for debts caused by addictions?

While such a question should be answered by an attorney specializing in bankruptcy law, the types of debts are often more relevant to a bankruptcy petition’s successful discharge than the reasons behind the debts. Addictions are involved in many effective bankruptcy filings.

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