It was once an arcane term only known to economists, but the phrase "credit crunch" has been so widely used over the past year that it has been added to the latest edition of the Oxford English Dictionary.

While it has become part of common parlance, what is a credit crunch and how could Wentworth Solicitors help you? Here we give some typical scenarios where we may be able to assist.

What is a credit crunch? In simple terms, a crisis caused by banks being too nervous to lend money to us or each other. Where they do lend, they charge higher rates of interest to cover their risk. In the real world, that means more expensive mortgages, dearer credit cards, a huge pain for pensioner savers and other investors as stock markets fluctuate wildly, and in the worst cases repossession and bankruptcy.

Is it the same as a recession? No these are not the same. A recession is usually taken to mean two successive quarters of negative economic growth. Strictly a credit crunch can either be separate from or part of a recession.

How did this affect the UK? Many UK banks have invested large sums in sub-prime backed investments and have had to write off billions of pounds in losses. But due to a downward spiral matters got worse. Institutional Investors themselves became nervous about buying any investment linked to mortgages, no matter how high their quality. This largely explains the problems not just in the UK but on a global scale.
If you or your business is facing a worst case scenario such as these do not be paralysed by fear ; contact us immediately - yours might not be the first financial 'life' we will have saved. Do not Do nothing you know we are right about that.