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With the current economic crises, word such as credit, debt, interest and bankruptcy are no longer unheard of to us. This is the worst crisis we have seen since the Great Depression. Many people sustained 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 growing rates of interest were a major cause behind the large number of people defaulting on their mortgages . This eventually lead to the credit crunch which affected several industries. 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 started 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. Growing rates of unemployment, increase in prices of goods etc.People all around the world struggled to pay their mortgages and keep their houses.

Many people in the retirement age, living off pension funds really suffered due to the increase in prices of goods, high interest rates on their mortgages and had to give up their homes and again in many cases were forced to file bankruptcy.

With regard to filinf bankruptcy, financial experts are of the view that this is not absolutely necessary. Doing Away With 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, leads to huge credit bills and sometimes being unable to pay it off and having to filed 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 recommend credit counselling for people to gain more knowledge about the choices available to them.

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