Editing Debt (section)

== Criticisms ==
{{POV section|date=September 2018}}

{{see also|World debt#Consequences of high debt}} 
Some argue against debt as an instrument and institution, on a personal, family, social, corporate and governmental level. Some [[Islamic banking]] forbids lending with interest even today. In hard times, the cost of servicing debt can grow beyond the debtor's ability to pay, due to either external events (income loss) or internal difficulties (poor management of resources).

Debt with an associated interest rate will increase through time if it is not repaid faster than it grows through interest. This effect may be termed [[usury]], while the term "usury" in other contexts refers only to an excessive rate of interest, in excess of a reasonable profit for the [[risk]] accepted.

In international legal thought, [[odious debt]] is debt that is incurred by a regime for purposes that do not serve the interest of the state. Such debts are thus considered by this doctrine to be personal debts of the regime that incurred them and not debts of the state.{{Citation needed|date=January 2012}}

Excessive debt accumulation{{clarify|date=September 2018}} has been blamed for exacerbating economic problems.{{By whom|date=September 2018}} For example, before the [[Great Depression]], the [[debt-to-GDP ratio]] was very high.{{Citation needed|date=September 2018}} This excess of debt, equivalent to excessive expectations on future returns, accompanied asset bubbles on the stock markets. When expectations corrected, deflation and a [[credit crunch]] followed. [[Deflation]] effectively made debt more expensive and, as Fisher explained, this reinforced deflation again, because, in order to reduce their debt level, economic agents reduced their [[Consumption (economics)|consumption]] and investment. The reduction in demand reduced business activity and caused further unemployment. In a more direct sense, more [[bankruptcy|bankruptcies]] also occurred due both to increased debt cost caused by deflation and the reduced demand.

{{anchor|Mental health}}At the household level, debts can also have detrimental effects — particularly when households make spending decisions assuming income will increase, or remain stable, in years to come. When households take on credit based on this assumption, life events can easily change indebtedness into over-indebtedness. Such life events include unexpected unemployment, relationship break-up, leaving the parental home, [[business failure]], illness, or home repairs. Over-indebtedness has severe social consequences, such as financial hardship, poor physical and mental health,<ref>{{cite journal | title=The relationship between debt and mental health: a systematic review. | author=Fitch | journal=Mental Health Review Journal | year=2011 | volume=16 | issue=4 | pages=153–166 | doi=10.1108/13619321111202313|display-authors=etal}}</ref> family stress, stigma, difficulty obtaining employment, exclusion from basic financial services ([[European Commission]], 2009), work accidents and industrial disease, a strain on social relations (Carpentier and Van den Bosch, 2008), absenteeism at work and lack of organisational commitment (Kim ''et al.'', 2003), feeling of insecurity, and relational tensions.<ref>{{cite web | url=http://eurofound.europa.eu/sites/default/files/ef_files/pubdocs/2010/70/en/2/EF1070EN.pdf | title=Managing household debts: Social service provision in the EU. Working paper. Dublin: European Foundation for the Improvement of Living and Working Conditions | publisher=European Foundation for the Improvement of Living and Working Conditions | date=2010 | access-date=20 February 2015 | author=Dubois, Hans | author2=Anderson, Robert | archive-date=27 November 2017 | archive-url=https://web.archive.org/web/20171127003702/https://www.eurofound.europa.eu/sites/default/files/ef_files/pubdocs/2010/70/en/2/EF1070EN.pdf | url-status=live }}</ref>