Larry has been financially reckless by borrowing money that he cannot afford to repay. In other words, he has been living beyond his means. Anyone who cannot pay their debts is said to be bankrupt. Bankruptcy means that an individual can no longer afford to pay all their debts. The consequences for borrowers who cannot afford to repay their loans are as follows: ¶
The assets they purchased can be repossessed. For example, home owners who cannot repay their mortgage can have their home repossessed by the bank. Repossession means that the bank takes over full legal ownership of the property. The former owners have to leave the property and the bank sells it to repay the mortgage debt.
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They will get a bad credit record. This will prevent them from borrowing money in the future from financial institutions or from being approved for credit cards or similar products.
Money Advice Budgeting Service (MABS) Anyone with financial problems can contact the Money Advice and Budgeting Service (MABS). MABS is the State’s money advice service for individuals and families. It provides free and confidential advice to people on: How to budget properly. How to manage and reduce personal debts. See their website at: www.mabs.ie
