Abstract
This paper has studied the harmful effects of debt on the three economic agents: consumers, business and government. The detailed analysis shows that heavy dependence on debt leads to bankruptcy for individuals, businesses and even for governments. This paper finds a non-linear relationship between debt to asset ratio and economic well-being of individuals. Economic well-being increase at lower levels of debt to asset ratios and reaches an optimal level. Further increase in this ratio leads to decrease in the economic well-being. It is recommended to minimize the level of indebtedness and promote selfsufficiency at all levels. There is need to develop financial capabilities of people, to extend debt advice and debt management, and to develop social institutions providing debt solutions.