A debt relief order is a legal authorization that provides full or partial debt forgiveness to debtors who meet specific criteria. The debtor must file an application with the court of jurisdiction, and the outcome may result in partial debt forgiveness or the dismissal of all debt identified in the application. This type of relief […]
Intermediate debt is a type of loan where the lender has a low priority claim on a company’s assets in the event of liquidation. It can be provided through subordinated debt or preferred stock, and carries higher costs for the lender due to the higher risk. Specialized lenders offer mezzanine investment funds for this type […]
Mortgage lenders use the mortgage debt ratio to assess a borrower’s ability to make monthly mortgage payments. The ratio is calculated by dividing the borrower’s monthly income by the projected monthly mortgage payment. Lenders also consider other debts before approving a mortgage. A front-end ratio of 30% or less is generally required, while a regression […]
A debt collection attorney specializes in unpaid bills and can be hired by both creditors and debtors. They may recommend litigation or credit counseling and can advocate for debt relief or a restructured payment plan. They differ from collection agency agents as they can be hired by debtors and operate on behalf of both parties. […]
The cost of debt capital is the interest paid on outstanding debts, including bank loans and bonds. Understanding it helps businesses manage finances, consolidate loans, and evaluate potential actions. It can also help determine whether issuing a bond is the best way to raise funds. The cost of debt capital is associated with the amount […]
Debt and equity financing differ in the type of instrument used to raise capital. Equity financing issues shares, while debt financing issues bonds. Both generate cash but attract different investors, with equity investors seeking ownership and bond investors seeking guaranteed returns. Debt financing is less risky for investors. The main difference between debt and equity […]
Convertible debt accounting is the process of recording transactions related to bonds that can be converted into shares. Accurate records, proper initial transactions, disclosures, and compliance with laws and regulations are important for maintaining accuracy and integrity. Financial disclosures may be necessary to inform stakeholders of a company’s financial position. Failure to comply with laws […]
Military families struggling with debt have options for relief, including debt consolidation through credit counseling or loans, protection under the Servicemembers Civil Relief Act, student loan repayment programs, and debt settlement as a last resort. These options can provide lower interest rates, longer payment periods, and debt forgiveness, but caution should be exercised to ensure […]
Debt deflation occurs when the value of an asset used as collateral for a loan decreases, leading lenders to adjust loan terms. This can put lenders at high risk if the property’s value falls below the remaining mortgage balance. Regulations govern lenders’ actions in such situations. Also known as collateral deflation or worse deflation, debt […]
Corporate debt relief can involve credit counselors, lawyers, or investment bankers depending on the type of relief sought. Solutions may include negotiating with creditors, financial reorganization, or selling non-core assets. Bankruptcy may be necessary as a last resort. Corporate debt relief will most likely involve a client and the involvement of a third party, such […]
Debt factoring allows businesses to obtain immediate cash from their receivables. The lender purchases a batch of invoices and pays a partial payment upfront, keeping a small commission. Careful scrutiny of terms and conditions is essential for a successful financing relationship. Debt factoring is a financial transaction in which a company’s receivables are purchased as […]
Non-dischargeable debt, such as student loans, taxes, and alimony, cannot be eliminated through bankruptcy, but can be reduced with the help of an attorney. Chapter 7 and 13 have different rules for non-dischargeable debt, and debtors must repay student loans. Debts not listed in bankruptcy filings must still be paid, and old debts cannot be […]
The Mortgage Forgiveness Debt Relief Act of 2007 temporarily suspended income tax on forgiven debt or refinancing of primary residences up to $2 million, to ease the burden on those struggling with debt due to the financial crisis. It only covers certain types of debt and was extended through 2012. The Mortgage Forgiveness Debt Relief […]
When choosing a debt consolidator, research their reputation and be wary of those who make unrealistic promises. Non-profit organizations may offer low-cost or free services, while for-profit consolidators may be more expensive. Look for a consolidator who thoroughly examines your financial situation and offers counseling to stabilize your finances. Check the consolidator’s reputation and success […]
When choosing a nonprofit debt consolidator, research their nonprofit status, reputation, and impact on credit rating. Obtain written statements to ensure no negative impact on credit report and compare service charges to find the lowest cost. When choosing the best nonprofit debt consolidator, it’s best to research potential organizations before making a final decision. Validating […]
A collateralized debt obligation (CDO) is an investment backed by multiple debt instruments, including bonds and bank loans. The mix of debt instruments creates varying degrees of risk and potential returns for investors. CDOs do not transfer ownership of the debt instruments but allow investors to access their benefits. The term is sometimes used more […]
A debt ceiling is a limit on the amount of debt an organization can carry, commonly associated with the US federal government. It aims to prevent excessive borrowing, but can be raised at any time through the actions of the legislative and executive branches. The debt ceiling was first instituted during World War I to […]
Debt instruments are financial obligations that commit the issuer to repay the debt according to agreed terms. Examples include bonds, Treasury bills, certificates of deposit, and trade papers. They allow for the transfer of debt ownership and generate income for creditors while protecting investments. Certificates of deposit and bonds offer modest returns, while trade documents […]
Debt forgiveness cancels all or part of a debtor’s outstanding debt to minimize loss incurred by a lender due to defaults. It can also boost a nation’s economy and provide relief for debtors, but may result in tax implications. Debt forgiveness is not an option until all possible solutions are explored. Debt forgiveness is the […]
Debt management software can help people manage and pay off their debts by categorizing expenses, creating a monthly budget based on income, and prioritizing high-interest debt. The best software can accommodate various sources of debt and allow for adjustments to pay off debt faster. People who have loans, credit card bills, and other sources of […]
