What is Debt ? Debt mean a loan, a liability that you need to pay legally, no matter whether you have the resources to pay it or not. Debt, when managed prudently, can help you accomplish your financial goals and satisfy your needs. That said, one small misstep and you can quickly find yourself trapped under mounting debt. In addition to causing you loads of financial stress, overwhelming debt can also significantly affect your mental health. Such high levels of debt are what most financial experts call a ‘ debt trap .’ What is meant by a debt trap ? Technically, a debt trap is a situation where you’re forced to take fresh loans to repay your existing debt obligations. And before you know it, you get stuck in a situation where the amount of debt that you owe takes a turn for the worse and spirals out of control. Such a situation typically arises when your debt obligations exceed your repayment capacity. For instance, when the income that you generate is not enough to clear your deb