The Causes Of Over-Indebtedness | Disabled People, Poverty And Debt

Over-indebtedness is a financial situation that does not favor borrowers, but it makes the financial lending institutions a lot of money.  

Can Disability Be Both A Cause And A Consequence Of Poverty?

Among the other causes that contribute to poverty, disability is one of the major factors of poor individuals. In underdeveloped countries, if a person is poor, they will struggle to attain good health, education, and other benefits. 

Disability is interrelated to poverty. Although if you study the literature based on disabled poverty, you will find three hypnotized defined models.  

Model #1 – The Individual’s Problem Model #2 – Government Assistance Model #3 – World Health Organization

The Causes Of Over-Indebtedness

Over-indebtedness is an undesirable state for both microfinance institutions and borrowers. 

1. Shift In Circumstance 

Since there is no proper mechanism introduced that measures the shift of change in circumstances, the credit industry struggles to deal with it. If consumers already have a high level of accumulated debt, they might face low savings, and their debt to income ratio will rise.  

2. Change In The Employment Eligibility

Employees who have the skills and facilities to work from home are better prepared to survive this recession. But again, skilled market labor will face the consequences, which will continue to divert as a consequence of unemployment and over-indebtedness. 

Often a change in jobs can result in a gap of time before new benefits are acquired. Due to the delay, individuals who have already borrowed money from different financial institutions may not be able to repay the monthly minimum, which results in late fees. 

3. Losing Benefit Entitlements 

Living on a low income is another reason for over-indebtedness. Because a tight budget is a common reason people unintentionally overspend, some people resort to borrowing money via personal loans or other high-interest options like payday or title loans. 

4. Living On A Low Income

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