Personal Debt Restructuring and Corporate Debt Restructuring

Debt restructuring whether corporate or personal is the necessity to reorganise your debts in order to ensure that you can attempt to have some financial security in the future.  Such a reorganisation can involve many parts including asset disposals, mortgage debt forgiveness, reduction in loan repayments, increase in income, debt forgiveness, corporate liquidation, creditor arrangements, and personal bankruptcy.

Debt restructuring is often undertaken when the debt mountain becomes too great and the person or entity is at breaking point. It is unfortunate that it is left that late because if addressed earlier it is often much more successful and the outcome is much more beneficial to the parson or entity endeavouring to restructure. This sounds like a bank statement and on this very rear occasion Neo Financial Solutions agrees with the banks. Though the motive for Neo agreeing with the statement is very different to that of the banks motive.

Debt Restructuring when addressed early can be done in such a manor that you the debtor can have control over what you do with your assets and limited cash resources. If you simply go to your bank and discuss the matter with them their object will be to “see how much money you have and see how they can get as much as they can off you”. Now, despite what the banks claim that is not in your interest. In fact it is directly against your interest because usually one of the first things any debt restructuring investigation will show is that you should be reducing your payments to banks for various loans and mortgages and not keeping the payments up or paying them more! In these difficult times the payment of a credit card bill and missing a mortgage payment may be the difference between feeding the family or not. And here at Neo Financial Solutions we always recommend feeding the masses rather then the Bankers!

Some of the matters that would need to be addressed in the initial debt restructuring assessment are:

All assets need to be listed and an approximate value put on each together with any loans/mortgages outstanding that the assets are securing. Details of all repayments being made on the loans and a description of the loan type i.e. mortgage, term loan etc. particular attention needs also be given to assets which may be owned but are not pledged to any bank or used to secure any loan.

Income needs to be itemised to include salaries, business income, rental income, etc. The level of income and the types of income is very important in the debt restructuring process, for example, income from rental income should be used to pay loans/mortgages on the properties producing the rental income. Other income should not be used to top up these payments and this usually form part of the restructuring package.

All expenses apart from the above mentioned loan payments expenses should be detailed with a view to reviewing and prioritising their importnace. It is very important to ensure that all expenses are given careful consideration and the importance of some over others are considered. This is a very personal thing and should be done on an individual bases because what is important to one person may not be as important to another.

Finally, whether for personal or corporate debt restructuring it is vital to consider where it is you want to end up and what assets you want to try and keep. This will enable the restructuring to focus on what is it is you are trying to achieve. When that objective is clearly defined it make the restructuring specialists job much easier and results much more definable.