The threat of insolvency is
very real
Most of us would not have a clue what to do if we were to become insolvent, or what warning signs to look out for when applying for credit. We all assume that we would not be able to get approved credit if we could not afford it. But this is where everyone is dreadfully mistaken.
Some institutions will give you money if you could not afford it, and some would not even bother to calculate if you could afford it! As long as they get their market share, the shareholders will believe that the company has growth potential and the share price will be strong. They count on the good nature of consumers to make every effort to repay their debt and issue warnings and fines when things start to go wrong.
That’s
right. Some institutions would not care
if you were actually broke. As long as
you have a good credit rating they will continue to give you more credit,
knowing that you will keep up your repayments to protect your credit rating.
You could end up insolvent and loose all you own if you are not careful about
how you use debt.
67,580 people were declared insolvent in 2005.
Individual insolvencies increased by 57% in the last quarter of 2005,
compared with the last quarter of 2004.
The problems
associated with accumulating more debt than your income can cope with include:
ü Damaged credit rating
ü Black listing
ü Negative Equity
ü Assets repossessed
ü Bankruptcy
ü Court hearings
ü Criminal charges
The leading cause of these problems is not repaying the debt that is actually owed, but repaying the interest charged for it. It pays to leave enough headroom in your budget for unexpected increases in the rate of interest charged.
Cheap
Credit Is Too Good To Be True
Together We Owe
Over £1 Trillion
Debt Can Make Goods More Expensive To Buy
Lending Is Not Properly Regulated
The Threat Of
Insolvency Is Very Real
There Is No Such
Thing As Free Credit
You Can and
Should Use Debt To Make Money