What is personal debt? A personal debt implicates the liabilities of a debtor as an individual. Such obligations derive from: purchase of goods and services, and they are known as bad debts; or from borrowing an amount for important and needed objects or services, i.e. paying for education, purchase of home, car, medical and hospital expenses, etc. (known as good debts). Falling into debt is not only connected with financial difficulties but also with stressful situation for the debtor.