In the last few months, due to the recession, most of us have become very familiar with the words credit, debt, loans, interest, bankruptcy, etc. This is the worst crisis we have seen since the Great Depression. Many people suffered great losses due to the still ongoing recession. Filing bankruptcy was the only option for most.

Mortgages being defaulted was what intitially led to all these problems. The rising rates of interest played a major role behind the large amount of people defaulting on their mortgages . This then lead to the credit crunch which left several industries struggling to survive. A major industry that was affected by the credit crunch was the automobile industry. That automobile which relies on credit sales such as hire purchase agreements and leasing, lost a large portion of its revenue and therefore started to crash.

This eventually had a great impact on several other countries. 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.

Many people in the retirement age, surviving off pension funds have been greatly affected due to the rocketing prices of goods, high interest rates on their mortgages and were forced to leave their homes, being left with no choice but to file bankruptcy.

Financial experts say that with careful observation people can easily avoid having to file bankruptcy. The first measure a person can take to prevent having to file bankruptcy is to destroy credit cards. Credit cards are one of the main causes of excess debt. Credit cards encourage spending excessively and a majority of the public usually end up spending more than they can afford. This excess spending, leads to huge credit bills and sometimes being unable to pay it off and having to file for 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 intelligent choices with regard to how they spend.

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This entry was posted on Tuesday, August 31st, 2010 at 5:44 am and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.