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 endured huge 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 rising rates of interest were a major cause behind the increasing number 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 relies 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. 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.

Most people above 60, living off pension funds have been greatly affected due to the rocketing 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. Getting rid of credit cards is the best way to start off in order to prevent yourself from having to file bankruptcy. Credit cards are one of the major causes of excess debt. Credit cards promote splurging 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 file for bankruptcy. Secondly, it is important to stop buying more houses than one can afford. High interests on mortgages makes it almost impossible for people to pay and may therefore have to leave their houses or resort to the choice of having to filr bankruptcy.

Most experts urge credit counselling for people to become more aware the choices available to them.

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