Message Not Received? The Effects of Creditor Messaging and Pressure on Consumer Debt Management

Why do consumers avoid creditors when they send messages that put pressure on consumers to repay their debts? This behavior, called creditor avoidance, ultimately hurts consumers but many still engage in it despite it being against their best financial interests. To better understand factors that contribute to this behavior, this article uses unique data from a survey of 3,287 over-indebted consumers. Specifically, this research examines the association between creditor messaging and consumers’ creditor avoidance, and how consumers’ negative emotions about their debt circumstances are related to creditor avoidance behaviors. Findings indicate that debt-related shame and guilt, as well as the feeling of “drowning in debt,” are associated with creditor avoidance behaviors. Other negative emotions, such as anxiety and unhappiness, however, are not. Further, creditor messages that match the consumers’ pre-message emotional state risk intensifying the adverse effect of creditor contact on consumers, thus increasing creditor avoidance. In these circumstances, creditor messages may act as an additional stressor rather than as a nudge towards repayment. These findings have implications for how credit organizations and policymakers communicate with, and assist, over-indebted consumers.