A debt trap is a situation that occurs when someone borrows more money than they can afford. This can create a situation where the person is trapped or enslaved.
Criteria for a debt trap:
(1) person has borrowed money
(2) the amount of money and its interest exceeds the person's ability to repay the obligation
This can lead to a vicious cycle where the person is able to pay off the interest but can never bring down the principal, essentially making them permanently in debt.
People at risk:
(1) easy access to a source of credits (such as credit cards) AND untrained/undisciplined in money management
(2) gamblers or spending addiction
(3) someone who has an emergency with high bills (such as medical expenses)
(4) poor judgment when setting priorities or choosing between options (as in applying for college)
(5) someone who is unprepared
(6) denial
The debt trap may also be a strategy used by the unethical to control others.
(1) Mafia or predatory lender
(2) Chinese Communist Party (CCP)
