Debt restructuring, or debt redemption, is a combination of loans into one: the new loan is designed to provide a financial balance to the borrower or to finance a new project. Can we restructure all its loans?
The different types of debt restructuring
The restructuring of real estate loans is intended to take out a more advantageous loan to shorten the repayment period or to reduce the monthly payments and thus blow. The disadvantage in the latter case is that the cost of credit will increase if the remaining repayment time is small. The borrower will again pay interest that he has already paid. It must also provide in the restructuring operation for the payment of the penalties provided for in the contract for the early repayment of the outstanding capital. These penalties correspond to 6 months of interest or 3% of the outstanding capital. The gain obtained must therefore cover these costs.
Restructuring of consumer loans is possible in the context of over-indebtedness, but not only. Any borrower may want to lower his monthly payments if his income has decreased, to maintain a certain standard of living, or if he wants to find cash to finance a new project. The maximum period of the new credit in this case is 12 years. The rate is also higher than that of a home loan. It is therefore necessary to compare the various offers with a broker for example.
Among the various restructured loans, there may be a mortgage and one or more consumer loans.
Debt consolidation excludes real estate loans. It only concerns consumer credit and credit cards. Generally, it intervenes in the framework of an overindebtedness, to avoid a personal bankruptcy. Debt consolidation is hard to get: the credit rating of the borrower must be good. It is therefore in the borrower’s interest not to wait for an over-indebtedness procedure to be initiated, or not to be banned. Anything posted at the Banque de France will penalize him badly.