What do you mean by debt trap?

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DEBT TRAP
A situation in which a debt is difficult or impossible to repay, typically because high interest payments prevent repayment of the principal. An incentive structure that lures individuals into accepting long-term debt obligations under conditions that strongly favor the lender.

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A deBt tRap is a situation in wHich a bOrrowEr is led into a cycle of re-borrowing, or rolling over, .......thEir loan payments Because they arE unaBle to affoRd the schedUled payments on the pRincipal of A loan. These trapS are usUally caused by high-inteRest raTEs aNd short teRms.......

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When the take a loan and he can't able to retun is called debt trap

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When the person is not able to repay the debt loan is called debt trap and may result in suicide by a person.
HOPE HELP U.

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What is a Debt Trap?
A debt trap occurs when an individual or organization borrows money and ends up in a cycle of debt that becomes increasingly difficult to escape. This situation often leads to a reliance on new loans to pay off existing debts, creating a vicious cycle.
Key Characteristics of a Debt Trap:
- High-Interest Rates: Borrowers often take loans with high-interest rates, increasing the total amount owed over time.
- Minimum Payments: Making only minimum payments can lead to prolonged debt, as a significant portion of the payment goes toward interest rather than the principal.
- Rollover Loans: Borrowers may be forced to take out new loans to pay off old ones, creating a dependency on continuous borrowing.
- Diminished Creditworthiness: As debt accumulates, a borrower’s credit score may decrease, making it harder to obtain favorable loan terms.
Consequences of a Debt Trap:
- Financial Stress: The constant pressure of managing debt can lead to significant stress and anxiety.
- Limited Financial Freedom: Individuals may find themselves unable to invest in opportunities or save for the future due to their financial obligations.
- Risk of Bankruptcy: In extreme cases, borrowers may be pushed toward bankruptcy, which can have long-term impacts on their financial health and credit history.
Preventing a Debt Trap:
- Budgeting: Creating and adhering to a budget can help manage expenses and avoid unnecessary borrowing.
- Emergency Fund: Building an emergency fund can reduce the need for loans in unexpected situations.
- Financial Literacy: Understanding personal finance and the implications of debt can empower individuals to make informed decisions.
In summary, a debt trap is a detrimental situation characterized by high-interest borrowing and reliance on new debt, which can lead to severe financial consequences. Awareness and proactive financial management are key to avoiding this cycle.

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