What are Debts
DEBTS IS MUCH MORE THAN MONEY
When someone enters the debts trap cycle , continual borrowing that leads to increased debt, increasing costs, and eventual default.
Borrowing from Loved Ones
Making Minimum Payments
Taking more loans from licensed and unlicensed money lenders
A debt trap is a situation in which a borrower is led into a cycle of re-borrowing, or rolling over, their loan payments because they are unable to afford the scheduled payments on the principal of a loan.
Below we compare two illustration of different programmes . One from the
banking sector whilst the other from a government programme.
As seen below :
Total Debts : $56,700
He was initially paying 7 creditors from the
banks at an amount of $1,700.
After Bank programmes kick in he is paying
$1,220/mth for 7 years .
New total : $1,220 * ( 7 * 12 ) = $102,480
Total interest incurred : $45,780
Total Debts : $50,045.07
He was owing debts to 4 creditors .
After government programme kick in he is paying
$300/mth for 5 years .
New total : $300 * ( 5 * 12 ) = $18,000
Total interest incurred : $0
Total Discounts : $32,045
[Shown above are actual case studies]