Loan Restructuring or Take-Out


A debtor who incurs in delay or defaults in the payment of his maturing debts faces legal action from his creditor. The first action a creditor will take is to foreclose the collateral and file a collection case if a deficiency after foreclosure occurs, or if the loan is unsecured from the start. Once judgment is rendered in favor of the creditor he may proceed to execute on the judgment through levy or attachment of property belonging to the debtor. For a businessman his credit worthiness is as important as his product or service, and therefore he cannot afford to have a negative credit rating because it will affect his relationship with his suppliers and the banks. The best alternative for the debtor in this situation is to negotiate with his bank for a debt restructuring or condonation, or apply for a loan take-out with another bank, in order to avoid foreclosure and regain a “current” status for his account, since having a past due loan obligation no matter what the reason is bad for business.


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