January 2, 2010
File Bankruptcy
With the current economic crises, word such as credit, debt, interest and bankruptcy are not uncommon to us. This is the worst crisis we have seen since the Great Depression. Many people endured great losses due to the still ongoing recession. Filing bankruptcy was the only option for most.
The recession started off in the United States due to the high rate of mortgages being defaulted. The growing rates of interest played a major role behind the growing amount of people defaulting on their mortgages . This then lead to the credit crunch which affected several industries. The automobile industry is said to be one of the biggest victims. That automobile which depends on credit sales such as hire purchase agreements and leasing, lost a large portion of its revenue and therefore began to crash.
The United States being one of the most important countries in terms of international trade eventually had its inevitable effect on the rest of the world. As a result, other countries had similar effects. Growing rates of unemployment, increase in prices of goods etc.People all around the world struggled to pay their mortgages and keep their houses.
Most people above 60, living off pension funds really suffered due to the rocketing prices of goods, increasing interest rates on their mortgages and were forced to leave their homes, being left witho no choice but to file bankruptcy.
With regard to filinf bankruptcy, financial experts are of the view that this is not absolutely necessary. The first step a person can take to prevent having to file bankruptcy is to destroy credit cards. Credit cards are one of the major causes of excess debt. Credit cards promote splurging and a majority of the public usually end up spending more than they can afford. This excess spending, results in huge credit bills and evetually results in having to file bankruptcy. Secondly, it is best to avoid buying more houses than one can afford. Interest on mortgage payments can be really expensive and in the event of the person not being able to pay, they will either have to give up the house or other securities, or file bankruptcy.
Credit counselling is urged by many experts as it informs people of their financial status and allows them to make carefuk choices on their credit spending.
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