Debt Settlement
What is a Debt Settlement? A debt settlement refers to an agreement reached between a creditor and a borrower in which a reduced payment from the borrower is regarded as full payment. In other words, a debt settlement is a debt reduction agreement reached between a creditor and borrower. Understanding a Debt Settlement A debt...
Debt Refinancing
What is Debt Refinancing? Debt refinancing is the replacement of an existing debt by means of another debt with terms and/or conditions that are more favorable. In other words, debt refinancing refers to the replacement of existing debt with new debt. How It Works Debt refinancing is commonly used to take advantage of new financing...
Financial Covenants
What are Financial Covenants? Financial covenants are the promises or agreements entered into by a borrowing party that are financial in nature. An example of a financial covenant is when a borrowing company agrees to maintain (staying above or below) an agreed ratio, typically financial ratios such as the interest coverage ratio, total assets to...
Collateral Quality
What is Collateral? Collateral (often referred to as collateral security) is when an asset is pledged to a lender, by a borrower, in support of a credit request. If a loan cannot be repaid or refinanced, a lender may take enforcement action against the borrower’s assets in order to recover the outstanding loan principal plus...
Who Evaluates Bank Loans?
Who Evaluates Bank Loans? The lending process involves a series of activities that lead to the approval or rejection of a bank loan application. The loan department of a bank employs different credit professionals with unique roles and responsibilities that complement each other to make the lending process complete. Loans are one of the primary...
