Campaigners and officials from Castlemilk Credit Union made the warning during a meeting with MPs from the Scottish Affairs Committee on cuts to housing benefit for tenants who have spare rooms.
Billy McFadyen, of Castlemilk Credit Union, said: "We are having people coming looking to borrow money to pay off their rent."
He told the committee that if people were not able to borrow from the they were going to payday lenders or money lenders.
Maureen Smith, a solicitor with Castlemilk Law Centre, said she had similar experiences.
She said: "I have seen more people who are contemplating suicide. More people are destitute."
Clair Malpas, Cassiltoun Housing Association regeneration manager, said there are not enough properties to allow people to move to the size of home that would allow them to escape the benefit cut.
She said: "There is a lack of one-bedroom homes in the area and most social landlords don't have many one-bed properties."
She said housing associations were encouraged previously by the Scottish Government to build larger properties through the housing grant system.
The meeting was held to hear from those working with the fall-out from the UK Government's welfare reforms. The Scottish Affairs Committee has called for the abolition of the tax.
Committee chairman Ian Davidson MP said: "The 'bedroom tax' is placing a cruel burden on the shoulders of those least able to bear it."