With the current economic crises, word such as credit, debt, interest and bankruptcy are not uncommon to us. After the Great Depression in the 1930s the current recession has been the worst financial crisis. Many people ,and still are due to the still ongoing recession. In many cases the losses were so great that they had to file bankruptcy.

Mortgages being defaulted was what intitially led to all these problems. The rising rates of interest were a major cause behind the growing number 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 began to crash.

This eventually had a great impact on several other countries. As a result, other countries had similar effects. Rise in the rate of unemployment, increase in prices of goods etc.People all around the world struggled to live as they could no longer afford their mortgages.

Many people in the retirement age, living off pension funds really suffered due to the increase in prices of goods, increasing 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 major causes of excess debt. Credit cards promote spending excessively and a majority of the public usuallylose control of their spending habits. This excess spending, results in huge credit bills and evetually results in having to bankruptcy files. Secondly, it is important to stop 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 recommended 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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This entry was posted on Wednesday, January 6th, 2010 at 4:19 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.