Monthly Archives: March 2019

Debt restructuring despite negative private credit

What is a debt restructuring? Basically, this is nothing but converting a short-term loan and high monthly installments into a long-term loan at lower rates. This loan amount is used exclusively to replace the old loan. For goods purchases, he is not really intended. How does it look if the credit check is negative? Is there a rescheduling despite negative private credit?

What is the credit rating?

The ability to pay influences the creditworthiness of a bank customer. In the past, if an invoice was not paid on time or if there are still outstanding receivables, then this is a negative feature in the private credit, from which point on a loan commitment from a bank has become very unlikely. It is better not to let the case happen at all. But once the child has fallen into the well, there are still possible solutions.

Credit Providers

Credit Providers

On the Internet, some credit intermediaries, who offer a rescheduling despite negative private credit. In the background are lesser-known banks, which in some circumstances are ready to reschedule. In general, one should ask oneself, how high the monthly rates should be, so that one comes without problems over the rounds. It would be counterproductive if one chooses too high installment payments and can not pay afterwards.

That requires a regular income. Without a permanent job rescheduling is not possible despite negative private credit. Self-employed and freelancers have a debt rescheduling even harder because their income is relatively uncertain. In contrast to employees subject to social security contributions, they do not have a regular monthly cash receipt. That makes the matter more difficult.

Anyone who hires a credit intermediary, should pay attention to the seriousness. If he asks in advance for any fees, then it is called away. Credit intermediaries only get a commission on successful conclusion of a contract. This is paid by the borrower and in most cases this is credited to the loan amount.

Personal loans

Personal loans

A typical feature of a personal loan is that private financiers are in the background. Normally, people who need a loan to buy consumer goods, to finance holidays or to study meet there. However, it is not uncommon to apply for a loan for a debt restructuring despite negative private credit. Whether this is successful depends on the respective lenders. At this point, it should be mentioned that the loan amount is composed of the funds of several lenders.

One more word about the handling fees

The BGH has decided that processing fees for loans are now inadmissible. But that should not obscure the fact that this applies only to loans in Germany. Anyone planning a rescheduling despite negative private credit abroad, must expect processing fees and can not take legal action against it. However, if you have to turn to a bank for lending abroad, you are welcome to accept it. That’s still better than having to do without money.

Who pays attention to his creditworthiness, does not need to fear negative entries in the private credit. This means that the bills are always paid on time. The monthly installment for a loan should always be paid on time. In addition, you should not burden yourself with too many installments, then you do not need to take out a loan.

Collateralized Debt Obligation, Definition and Risks

What is Collateralized Debt Obligation?

A Collateralized Debt Obligation (also known as CDO ) is virtually a debt obligation, with the latter exercising the collateral security role. A CDO consists of hundreds or tens of ABS bonds, which in turn are guaranteed by a large number of individual debts. Collateralized Debt Obligation is considered one of the primary causes that led to the crisis of subprime securities.

The reimbursement of CDOs is not based on the liquidation of assets by the issuing company or on the income prospects of a given company, but only and exclusively from a set of underlying bonds that are defined, in fact collateral and which identify a financial or real asset. which guarantees the timely payment of a debt.

In the case of a Collateralized Debt Obligation, the company issuing the security does not issue bonds to finance investment plans, since it does not perform a real economic activity but rather consists of buying and holding a portfolio consisting of ABS bonds and their any tranches.

CDO Risks

The latter are usually cataloged according to the risk that their underlying assets represent. After proceeding with the purchase of the bond portfolio, the issuing company transforms it into a Collateralized Debt Obligation and then transfers it to a company established specifically for its detention and defined SPV ( Special Purpose Vehicle ), which in turn provides for the division of ABS bonds in several tranches and giving higher priority to the senior CDO ones.

Collateralized Debt Obligations are an advantage for the issuer, since they are a tool that can contain many small parts of low or medium quality debt and make them a unique, high quality instrument. This factor is made possible by the massive diversification that is carried out within the CDO bond portfolio, which, as in many other situations, considerably reduces the risk deriving from possible insolvencies.

Precisely because of its lower riskiness, a CDO stock can be more easily placed in a financial market than the single underlying bonds, which, on their own, may not be very liquid. ABS investors prior to the creation of CDOs were likely to buy the risky senior, while the banks in their portfolios held the junior ABS, more risky but also more profitable for this.

This senior-junior subdivision left many free and non-held mezzanine ABSs and one of the reasons that led to the creation of CDOs was precisely to make this particular tranche of ABS more attractive on the market. The rating of CDOs containing ABS is usually very high, precisely because it allows the issue of senior tranches that previously would not have been possible to create.