Question

examine any three situation in which credit pasher the borrower into debtv. trap​

Answer 1

Explanation:

In situation with high risks credit might create problems and pushes the borrower into a debt-trap. He is much worse off than before. For example crop production involves high costs on inputs such as fertilizers pesticides water etc. Farmers generally take loans at the beginning of the season and repay the loan after harvest. But the failure of the crop makes loan repayment impossible. They have to sell part of the land to repay the loan or a fresh loan may be required to repay the previous loan and the borrower may find himself caught in a vicious circle and recovery from such a situation is very painful.

Answer 2

Three situations in which credit pushes the borrower into a debt trap;

1. The borrower should always be aware of his/her financial environment. If he/she borrows an amount that is beyond their financial limit and control, then it could slowly start to push him/her into a debt trap.
2. Unexpected financial risk is another reason. Take the case of a farmer. He/she borrows money with the belief that the harvest season would give him/her enough returns to pay off all the loans. But unexpected disasters are more than enough to fail all the planning and push him/her into a debt trap.
3. Taking financial decisions without any proper planning or prior knowledge. Along with it listening to the advice and following the words of wrong and untrustworthy people in making financial decisions can push the person into a debt trap.