Tuesday, 7 December 2010

The Debt Trap

"A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are punished ". Proverb 22:3.
The Season for Joy and Festivities started in the UK in October and since then, as usual, shopping malls have been filled with goods ; coupled with impressive offers of huge discounts which few shoppers can resist.
The competition for Christmas sales has intensified during these final weeks before Christmas and will continue even into the New Year with the annual New Year Sales rush. The commercial "warlords" are in constant competition to out-do each other in their bid to attract shoppers with their unique adverts and offers of "BUY THIS, GET THAT FREE!"
Despite the so- called economic crunch ,store owners are not complaining ; thanks to the British public's penchant for retail therapy and the sheer joy of hitting the shops to "shop until you drop!"; especially for Christmas .

The adverts and mail informing shoppers about "great offers" from major high street stores and on line shops have increased ; just as the offers and baits from credit companies to the public , asking people to sign on for huge sums of credit and loans, have become unrelenting.
I know, because I have been inundated by letters and phone calls from dozens of companies offering credit ; which I never requested for.
No need asking such people HOW they got my phone numbers and address!
There have been offers from banks , credit card companies and stores ; letters containing credit cards , stores cards and letters offering loans and credit ; ranging from £500 to £15,000 ;all with very attractive low interest rates.
A pleasant but firm "No!, thank you!" has been my response to the polite voices offering "FREE" credit on the phone.
From discussions with friends and family , I gathered that some of them have experienced the same pestering mail and calls to take tempting offers of credit facilities from banks and loan companies.
This is THE SEASON for mega shopping and people need as much extra money as they could get.
The lenders know this ; so what better time than now to tempt and burden the populace with huge debts?
Why would anybody encourage people to take up loans and credit ?
They would do so because they have PROFIT in mind ; at the borrowers'expense!
Which is fair enough ; they have profit in mind and the borrowers have pleasure , the pleasure and fun of shopping in mind!
Banks and loans companies are not charitable organisations.
Never mind the sweet smiles and pleasant voices when they reel out the hype about the "benefits" of the loan and credit being offered!

Credit is essential to oil the wheels of a modern economy and to give relief to individuals in times of financial challenges.
Loans and credit are indeed vital; a relief needed by all at one point or the other in life. They are a much-needed leverage for financing large scale business projects and funding personal desires and projects.
However , these debts , if not properly managed by the borrowers , could entrap and enslave them ; leading to loss , regret and sorrow!
Debt, has been described as "An ingenious substitute for the chain and whip of the slave driver " ~Ambrose Bierce.

In times like these , wisdom teaches that you should not accept loans and credit offers just because they were offered to you.
Be wary of financial traps ; do not deal with temptation by yielding to it!
Also , you should not embark on a buying spree and splash out on luxury holidays ; just because you have the cash and credit to do so!
One would have thought that by now, financial institutions would be wary of offering credit on a large scale like they used to do.
Due to the recent history of dismal credit management by both lenders and borrowers which resulted into huge personal debts, leading to the near collapse of the World economy ; principles of cautious lending and borrowing must be adhered to.
The practice of widespread distribution of credit to all and sundry , even to children , students and unemployed persons and persons with very bad credit history should have stopped ; to prevent a repeat devastation of lives and of the economy.
I gathered that although there has been a tightening up of credit facilities to unqualified borrowers , the drive to get thousands of creditors remain the top priority of financial institutions.
People with bad credit histories no longer stand the chance of getting credit from banks whose targets now are those with steady jobs and "viable" current or savings accounts , Investment accounts , ISAs etc
It's not news that some loan companies and pawn shops are, still, targeting the poor , the unemployed and persons with bad credit history.
Understandably,they would do that because their profit margin depends on how much credit they can sell.
Either way , these lending companies win.
When their debtors fail to pay up , these companies could turn nasty and their pleasant phone calls and letters would be replaced by stern warning letters and phone calls from their solicitors and debt recovery agents !
Actions taken to recoup loans would include dragging defaulters to court and this could escalate to the level of sending court bailiffs to seal up their premises and confiscate cars , jewellery ,household furniture and electronic gadgets !
If the above measures do not yield enough money to cover the loans sums; they would resort to recouping their bad debts from some insurance schemes which they have in place, to cushion their losses .
Ultimately , the taxpayer foots the bill for insurance compensations to financial institutions.

For the borrower , the damages of unbridled use of credit is far-reaching.
It is easy to collect "free" money and it is delicious to spend money which you have not worked for.
Credit contracts are usually sugar-coated traps ; carefully packaged as "soft , easy loans ; with very low interest or 0% interest rates"; with their terms and conditions written in very small print which most borrowers do not bother to read before signing for and collecting the loan sum.
However, a few months later , realisation sets in where the true picture of the debt entrapment becomes glaring to the borrower!
Lives have been and are being devastated by debt burdens which should have been avoided and not entered into ,in the first place.
Offers of credit are indeed temptations coated with honey ; traps, skilfully packaged as "financial help-lines!".
Temptation would come and it is not a sin to be tempted ; but woe betide those who allow temptations to destroy them!
James 1:14-15
The way out from the debt traps set by these tempting offers of loans and credit is , simply, to:
- accept the credit, enjoy it and ensure repaying the sum before or on the due date;
- or ignore such letters and take a pair of scissors and cut up the enclosed credit and store cards and bin them , immediately.
"An old fox understands the trap”
Like some have done , collecting the money and doing a runner to the other side of Planet Earth is not an option ; neither is declaring yourself "Bankrupt", a wise decision.
" Do not err , my beloved brethren" James 1:16.
Easier said than done?
Start learning to say "No!",to offers of credit which you know you cannot afford to pay back.
Or else you would become another sad statistics of "debt casualties".
Enjoy your shopping trips .
Merry Christmas and have a pleasant debt-free New Year!
God bless you richly. Amen
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