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Consequences Of Poor Financial Management (Harassment from Debt Collector,…
Consequences Of Poor Financial Management
UnManageable Debt
Unmanageable debt is when a person is unable to restore the amount of debt because the amount of interest this person is gaining each money is uncontrollable
It usually starts off with a loan with a high interest rates and if a person is unable to pay off this loan they may take out another loan to pay off the initial loan or the interest will continue to stack up and the person will lose control.
A persons life can be ruined, they could go bankrupt relationships and families can be broken apart.
Letter Of Demand / Default Notice
A person will get a letter sent to them from a person or financial institution which they owe money to. This letter will say that they need to pay off the debt in full or at least meet the minimum payment.
This is a problem because it puts the person in debt in much more financial stress if they have to pay up the full amount of the loan
The person who is affected by this is the person in debt because they need to somehow pull a large amount of money to pay off a debt
Harassment from Debt Collector
Harassment from debt collectors is when people will come after others who are in debt and continuously annoy and bother them about the debt which they owe someone.
A debt collector may show up at your work, non-stop ring your phone and show up at your house as a attempt to get a person to pay up their owed debt.
The harassment from debt collectors is a problem because it can be extremely embarrassing for the person in debt if debt collectors start harassing them in their workplace and it will make a person life's miserable trying to dodge encounters with debt collectors.
The person who is most affected by this consequence is the person in debt who is being harassed. Being harassed most likely comes with threats, force and aggression.
Inability to get credit
Credit is a key which allows people to get loans, mortgages etc. inability to get credit may hurt people in the long run when they may need money the most
This is a consequence because it will limit people to the amount of money which they have access to so if they need money for very important reasons.
The person which can't get credit is mostly affected by this because they may not be able to get a house and take a big step in their life.
Social / Personal Issues
Poor financial management can lead to families and relationships being broken apart
people who make poor financial management can be look down on by people in society
Bankruptcy
Bankruptcy is when a person in the state of being unable to pay off their debts
Applying for bankruptcy may relieve you of your debts and ultimately give you a fresh start
This consequence is a problem because this will make it harder for a person who has declared for Bankruptcy to get loans, get employed, get a mortgage etc.
People which may face consequences due to this process are the people you owe money to and the person who files for bankruptcy.
Foreclosure / Mortgagee Sale
Repossession
Repossession occurs when a person in debt has assets but can't pay off a debt. The assets will be taken by the bank / financial institution and be sold for money which will hopefully payoff the loan, and more assets will be taken until it is fully paid off and any remaining money will be give back to the person.
This consequence is bad because maybe the asset which could be taken by the bank might heavily involve a persons job and they may need it for errands and taking it may mean they cannot generate income fast.