We explore how financial scarcity affects the strategy people choose to pay off their debts and the role of information avoidance in debt repayment. We conduct an online experiment in the United Kingdom (N = 1,000) in which people are endowed with multiple debts and given the task to pay off as many debts as possible during 15 rounds. We manipulate the level of financial scarcity by randomly assigning individuals to experience either a negative, a positive, or no financial shock during these 15 rounds. The results show that perceived financial scarcity is related to less optimal debt repayment. In conclusion, our findings suggest that perceived scarcity propels further scarcity due to poor debt management.