Low income through a small loan
More and more people are getting into debt. One reason is that too many purchases are financed through loans. If you build a house or want to buy an expensive car or home furnishings, you cannot normally pay the bill in cash and are therefore forced to take out a loan. But many small purchases also have to be financed by people with low income through a small loan. The more products you finance through loans, the easier it is to lose track of your own financial situation, and sometimes you can only tell from the red numbers on your checking account that you are over-indebted. At the time of borrowing, some people are already in a difficult financial situation, but most are still in such a good position that they are able to repay the loan taken out, including interest on the loan.
However, unforeseen events can quickly occur, which pose financial problems for private households. An illness or an accident can lead to the fact that one has to give up or at least reduce his previous work. In addition, nobody can be sure that they will keep their jobs in the long term, especially now that the economic outlook for the next year is becoming increasingly bleak. A change within the family can also mean that the previous income is no longer sufficient to service the loans. The birth of a child, the need to care for sick relatives, but also a divorce with the resulting costs can suddenly worsen the financial situation.
New loans and their high loan interest also have to be repaid
In such a situation, you usually do everything to have more money available. It looks for a part-time job, and above all, how to save as much money as possible. If these measures alone are not sufficient, an attempt is made to get out of the predicament by rescheduling. New loans are taken out to replace the old ones. However, this only brings short-term relief, since the new loans and their high loan interest also have to be repaid. If this is not possible, the next loan is taken out, and so on. Gradually, overindebtedness can lead you to a situation in which you can only pay the interest on the loan and the interest on arrears that may already exist, but not the main claim.
At this point it becomes critical. If deferments are refused and rescheduling is no longer possible, the debtor is in default of payment. Perhaps the account will be seized, the money for living will become scarcer and may not even be enough for the rent. Many people can no longer get out of this debt trap on their own. Rescue from over-indebtedness through excessive loan financing promise the many debt counseling services that should definitely be availed of. It has also been possible for some time now to register for private bankruptcy and start again after a period of six years, without debt.