Financial Restructuring

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Financial Restructuring

Financial restructuring may include a loan based on the equity available from an asset (home, vehicle etc.).

Contact your mortgage lender to renegotiate the terms of your home mortgage. This will not help to reduce debt, though restructuring the debt may make repayment easier to manage. Or take out a home equity loan. If you have equity in your home and good credit, you may be able to borrow against it on favorable terms. Use the money for debt consolidation.

Borrow against an insurance policy. This is a option to access cash for debt consolidation because you have the option to repay it. If you don’t repay the loan your beneficiaries will receive a smaller payout when the policy matures.

Look for a credit card company that offers a balance transfer promotion. Use this for debt consolidation. Transfer all (or some of), your credit card debt onto the new credit card. Pay off as much as you can afford each month to reduce debt and don’t use any newly available credit.

Advantages of Financial Restructuring:

  • Opportunity for a lower interest rate means more money going towards principal
  • One monthly payment could be more easily managed than multiple smaller payments

Disadvantages of Financial Restructuring:

  • There may be a penalty if you are breaking the term of an existing secured agreement
  • Frees up available credit on your credit cards which, if used will exacerbate your problem
  • Depending on your current debt load, you may not qualify for a consolidation loan

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