Recrediting is an informal definition of the phenomenon in which bank customers are in a situation where half of their earnings are credit obligations, which include the loan amount including interest.
Conversion is a phenomenon in which we are holders of loans, whose total amount is 50 percent of the impact in our household budget. Currently, loans are available at your fingertips. Banks tempt with attractive offers and encourage to incur more and more liabilities. On the one hand, it is a very convenient way to get quick cash. On the other hand, there is a danger to financial liquidity.
How easy is it to fall into a spiral of debts?
It should be noted that people who usually borrow small amounts of money belong to the group of recredited people. At first, they want to repair their home budget. They forget, however, that they will have to give back the money from the loans together with interest. At this point, they are making a big mistake and instead of paying off their debts, they incur more debts, covering their previous obligations. In a short time they are holders of several loans. This situation leads them to the point where they lose financial liquidity and also have problems with household budget payments such as rent, utilities, etc.
Conversion and its effects
The result of these activities is falling into the so-called debt spiral. It has other consequences, such as loss of creditworthiness. We reach the point where banks refuse to grant us further loans. Institutions operating outside banks that are able to grant us further commitments are helpful. However, one should take into account that their repayment will cost us a lot and will not help us solve our problems and will wind the debt spiral in which we find ourselves.
How to deal with the effects of a redirect?
With several commitments, we receive many letters, phone calls and repayment reminders. As a result, we are subjected to enormous stress and we can make further mistakes. To avoid them, we should seek the help of experts in the financial industry, who will give us free assistance. Professionals provide experience, advice and help regain financial liquidity. With their help, we can refinance debt, i.e. combine loans into one liability and divide into installments convenient for us. Another solution is to apply for the so-called consumer bankruptcy, which consists in the cancellation or dismissal by the court of obligations belonging to the debtor.