Finance is a wide terminology which needs detailed analysis
and utmost attention of an investor. Irrespective of whether you are an
individual investing or an organization who believes in investing safely there
are still chances of unpredictable financial changes. In such cases finance
pundits recommend two outlets as solutions to getting out of troubles related
to finance. The first one being Refinancing
and the second one Debt Restructuring.
As a layman it can be very easy for people to interchange
these jargons. Furthermore they may also find it difficult to choose one of
these or the right one for their financial crisis. So, let’s move ahead with
the simple definitions of these words,
Refinancing is a procedure in which an old debt is cleared
off by altering a new payment timeline and terms for it. In this kind, the
personal or business investor pays a penalty for prolonging the duration of
settlement of their debts. On the other hand while we talk about Debt Restructuring it is the rates of
interest on the money invested are reduced and the maturity period is extended.
In a scenario where a company is involved the creditor gets a part of their
investment through equity.
Though there is a thin line between both the concepts we may
tend to get confused because of its ability to reduce stress from a downfall in
personal investment or from a business point of view and helps either of them
in recovering from a bankruptcy. In simple terms, the major difference between Refinancing
and Debt Restructuring is that Refinancing is nothing but taking a new loan to fulfill and old loan whereas in Debt Restructuring you may revise the terms and
conditions of the same loan at lower interest rates.
The easiest way to get to a decision of whether to opt for
Refinancing or Debt Restructuring it is essential to know what each brings to
the table and how your financial problem can be sorted with minimum hassle. The
terms for both investor type – individuals or business remain the same while
the conditions in which one is opted for may differ. If you find yourself in a
monetary fix where time limit may add to your adversity Debt Restructuring is for you and if you feel you can manage your
finances sooner and are ready to pay a considerable amount over another loan Refinancing can be a great option for
you. Any which ways both these proximity are a boon for one and all.
About Restructuring Advisory Group
Restructuring Advisory Group has 25 years of consultation in real estate and businesses, CMBS loan modification, Chapter 11 finance and refinancing. Read full review for Restructuring Advisory Group now.
