Finance Credit

How to solve bad credit equity loans


The process of bad credit equity loans restructuring has been used intensively by the clients that had difficulties to pay the monthly rates, as an attempt to improve the quality of the portfolios for the respective companies. The results were not that impressive, considering the unfavorable economic conditions, according to some of the most important financial institutions of the world.


However, the credits that are not restructured don’t necessarily need to go to default. Some of the clients find the necessary resources to pay the respective rates later, and even if we are talking about late payments, it is better than not paying them at all. In any case, if you have problems paying the monthly rates, it is better to talk with the bank about bad credit equity loans restructuring instead of waiting for the bank to declare foreclosure.


The restructuring process implies the implementation of some measurements such as extending the total duration of the credit, with the purpose of reducing the reimbursement effort for the client, and also the risks of the bank. However, there are some situations in which the bank can refuse the modifications of the credit contract. The bank usually approves those contracts, as long as the client can pay the new rates and can respect the new terms of the contract.


The majority of banks are willing to restructure large credits, but they are also looking for solutions for small credits and personal loans. However, as we are talking about some smaller credits on short periods, the banks are not so receptive.


The bad credit equity loans restructuring process brings the clients a partial or total debt restructuration, but also a longer period. The banks try to avoid foreclosure, as with the small prices of real estates today, they will not obtain the desired price for the respective property. The banks request restructuring commissions, and the total sum needed to be paid by the client is increased. Another solution would be to restructure the credit by prolonging the contract duration, but also by obtaining a longer grace period with a few months. The majority of banks ask for a restructuring commission, but if you can prove your financial situation is worse than it was at the beginning of the contract, the bank might not impose this commission.

Tips and comments

The solution of bad credit equity loans restructuring is preferred by the banks but also by the clients because it offers an increased reliability, and also because the credit is paid one way or the other. The client might be offered other alternatives, such as paying rent for the next period. Of course, the rent is significantly smaller than the mortgage rate, and the contract is considered ceased for the respective period. However, this method is risky, as there is no warranty that the client is able to pay the monthly rates once the renting period is over. It is a risky contract both for the client and the bank, and this is why this method is only preferred in some particular cases when the client expects an improvement of his or hers financial situation in the nearest future.  

By Stanculescu Mihai Bogdan, published at 01/05/2012
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