overborrowing
Overborrowing is the situation in which a borrower takes on more debt than can reasonably be serviced from expected income, revenues, or asset values. It can occur to individuals, businesses, and governments and is often triggered when borrowing costs are low, credit is readily available, or forecasts overestimate future cash flows. When anticipated repayments become unsustainable, the risk of default, financial distress, or insolvency increases.
For individuals, signs include rising debt service relative to income, frequent refinancing, and high credit utilization.
Measures used to assess and mitigate overborrowing include debt-to-income and debt-service-to-income ratios for households, leverage ratios