Table of Contents
The reason why negative assets (i.e. insolvency, where liabilities exceed the value of assets) are described as "painful" and may even be associated with "death" is mainly due to the multiple pressures it causes to individuals or families, including economic, psychological and social impacts. The following is a detailed analysis of the reasons:
1. Direct impact of economic pressure
– Heavy debt burden:
Negative equity means that even if you sell all your assets, you still cannot repay your debts (such as mortgages, credit, etc.). High interest rates need to be paid over a long period of time, and income may be swallowed up by debt, leading to a sharp decline in quality of life.
– Liquidity crisis:
If the value of an asset (such as real estate) plummets and cannot be sold, you may face a break in cash flow and be unable to cope with daily expenses or emergencies (such as medical expenses), falling into a vicious cycle.
2. Psychological and emotional breakdown
– Feeling of hopelessness and loss of control:
People with negative assets often feel that their efforts have been in vain (for example, after years of paying off a loan, their property is still a negative asset), believe that there is no hope of turning things around in the future, and develop a strong sense of powerlessness and self-doubt.
– Risk of anxiety and depression:
Long-term economic pressure may cause mental health problems such as insomnia, anxiety, depression, and even lead to suicidal tendencies. Studies have shown that there is a significant correlation between economic hardship and suicide rates (for example, the wave of negative equity in Hong Kong after the Asian financial crisis in 1997 was accompanied by an increase in suicide cases).
3. Pressure on social and family relationships
– Stigma and social exclusion:
Some social cultures view financial failure as a personal or moral defect. People with negative assets may be alienated by relatives and friends and discriminated against in the workplace, which exacerbates their sense of isolation.
– Family Conflict:
Economic difficulties can easily lead to quarrels between couples, strained parent-child relationships, and even family breakdown, further weakening the support system.
4. Structural factors exacerbate the difficulties
– Economic cycle and policy impact:
During a recession, housing market crash, or spike in interest rates (such as during the 2008 global financial crisis), negative equity problems can become massive and difficult for individuals to reverse on their own.
– Legal system restrictions:
Bankruptcy laws in some areas are more stringent, and debtors are subject to long-term legal collection (such as wage garnishment and consumption restrictions), resulting in slim chances of recovery.
5. Metaphor of "death" in extreme situations
– Suicide as a means of escape:
In extreme despair, some people may choose to commit suicide to "relieve" financial and psychological pressure or to avoid burdening their families.
– The “Death” of Enterprises:
For companies, negative assets may lead to bankruptcy and liquidation, which is equivalent to the "end of economic life."
How to ease the pain of negative equity?
– Seek professional help:
Work with financial advisors, debt restructuring agencies or lawyers to explore legal options such as debt negotiation and bankruptcy protection.
– Psychological support:
Relieve emotional stress and avoid isolation through counseling or support groups.
– Adjust financial strategy:
For example, negotiating repayment plans with creditors, selling non-essential assets, and increasing income sources.
– Policy-level reforms:
The government can reduce the survival pressure of those with negative assets by adjusting bankruptcy laws, providing temporary relief or interest rate subsidies.
Negative assets are not only "insolvency" in terms of numbers, but also a destruction of one's hope in life. Only by understanding the multiple pressures behind it and combining systematic support with personal efforts can we help those trapped gradually emerge from the shadows.
Further reading:
