Question
What is Debt trap ?
Answers
Answer:
Technically, a debt trap is a situation where you’re forced to take fresh loans to repay your existing debt obligations. And before you know it, you get stuck in a situation where the amount of debt that you owe takes a turn for the worse and spirals out of control. Such a situation typically arises when your debt obligations exceed your repayment capacity.
For instance, when the income that you generate is not enough to clear your debt, the interest on the outstanding loan amounts starts to pile up quickly. This forces you to avail fresh loans to clear off the piled up interest, thereby landing you in a debt trap.
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Debt trap ↴
A situation in which a debt is difficult or impossible to repay is called as debt trap.
It is caused due to HIGH INTEREST.
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