Borrowing your way out of debt: Can I borrow like a country?
By Mr Bankruptcy
26th June 2025
In both personal finance and national economics, debt is a powerful tool – but also a potential trap. The idea of “borrowing your way out of debt” may sound contradictory but it’s something I hear from individuals, companies, and governments.
The sustainability and consequences of this approach, however, vary dramatically, depending on who’s doing the borrowing.
Personal Debt: A Delicate Balancing Act
For individuals, borrowing to manage existing debt can take several forms. Debt consolidation combines multiple debts into a single loan with a lower interest rate, simplifying finances. Refinancing can replace an old loan with a new one under better terms. Both can be good options.
Rolling over debt, ie continuously borrowing to pay off previous loans can, in some cases, ease a debt burden, and short-term liquidity might even help someone to stabilize their income or reduce expenses. However, this strategy is usually unsustainable without deeper changes. If spending habits remain unchanged, the debt cycle continues.
High interest borrowing, like using credit cards or payday loans, often makes a situation worse, and new loans can come with hidden fees or penalties. Ultimately, you can’t borrow your way out of debt if you don’t have a plan to fix the root problems: reduce spending, increase income, or both.
National Debt: playing by a different set of rules
When countries borrow, the dynamics are different. Most sovereign nations borrow by issuing government bonds – IOUs sold to investors with a promise to pay interest and repay the principal later. These bonds are bought by domestic institutions, foreign governments, and even central banks.
Unlike individuals, countries borrow in their own currency, which they can technically just print some more of. They usually don’t repay debt in full, they just keep rolling it over by issuing new bonds. If needs be, they can also generate more revenue by raising taxes. They can also borrow more to stimulate the economy, fund infrastructure, or manage crises.
Some similarities and differences between individuals and nations
Thankfully I haven’t come across a client with a national level of debt but there are a few similarities, as well as differences, between individual and sovereign debt.
Repayment. For individuals, debt must usually be repaid in full, either through regular agreed payments or, in some cases, through bankruptcy proceedings. However, I have been able to write off some debts for clients (see my case studies). In contrast, countries often roll over their debt, issuing new debt to pay off old debt rather than repaying it outright.
Defaulting. When a person defaults on debt, the consequences include bankruptcy, damaged credit scores, and legal action. For a country, default can lead to currency devaluation, inflation, economic contraction and loss of investor confidence, but not bankruptcy in the traditional sense.
The purpose of borrowing. Personal debt is usually taken on for consumption, covering living expenses, or investment in an asset, for example buying a home or paying for education. National debt, on the other hand, is often used to stimulate the economy, fund infrastructure projects, or respond to economic crises.
Limits on borrowing. An individual’s ability to borrow is constrained by their income, assets, and credit history. A country’s borrowing capacity, on the other hand, is determined by investor confidence in its economic strength and its track record for fiscal responsibility (ie paying back its loans).
The best approach to debt
For individuals and companies, the key to managing debt is discipline and planning:
- Avoid high interest borrowing
- Consolidate or refinance only if it reduces costs
- Address the root causes of debt – overspending, under-earning, or poor financial planning
- Build an emergency fund and seek financial advice when needed
But for governments, responsible borrowing means:
- Maintaining investor confidence through sound fiscal and monetary policy
- Using debt to invest in growth, not just cover deficits
- Avoiding excessive reliance on foreign currency debt
- Preparing for downturns with strong institutions and flexible policy tools
Both individuals and nations can use debt as a financial tool, but the rules of the game are different. In both cases borrowing can be a useful strategic tool when paired with responsibility and a clear plan for sustainability and repayment. However, if a debt becomes unmanageable, people’s livelihoods and wellbeing will be harmed.
Whether you manage a household budget, a company’s finances or a national exchequer, make sure that debt remains your servant, not your master.
Finding the right support
I can’t really help the US with its $30 trillion debt (though I’d start with some proper housekeeping); however I have helped many individuals and business owners find their way out from under an unmanageable debt burden. For most people, finding a trusted advisor is the first step on your journey to financial freedom.
At James Rosa Associates, we’ve helped countless clients to achieve financial freedom through our comprehensive and personalized approach.
We offer a full range of advice and professional services to individuals, business owners and directors faced by unmanageable debt and who want a solution. We also help anyone involved in a civil or commercial dispute. Our services include:
We are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.
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We understand how unmanageable debt can affect lives and we want to help as many people as we can.
If you are ready to tackle your debt problem, or want to bring a dispute to a swift and cost-effective resolution, contact James Rosa Associates, ring 0845 6807217 or email enquiries@jamesrosa.co.uk and find out if you qualify for our free consultation service.
Please be advised that all views expressed in these posts are those of the author and not of James Rosa Associates ltd.