Is Debt Consolidation Better Than Bankruptcy

Debt consolidation is a process whereby the borrower obtains a new loan to replace credit card balances and other unsecured debts. For example, if you have an unsecured loan, 3 credit cards, and a line of credit, you may qualify for a consolidation loan to pay off your outstanding obligations. You will be making 1 payment a month instead of 5 separate payments.

Debt consolidation loans are usually provided by credit unions and banks. Some borrowers use the services of consolidation companies that negotiate the terms and conditions of the new loan.
Debt consolidation offers a number of advantages, and one is that borrowers are usually allowed to repay the loan over an extended period of time. Another advantage is that borrowers who manage to repay their outstanding balance benefit from an improved credit score and perfect credit report. Thus, qualifying for such a loan is a way to simplify your monthly payments, reduce interest costs, and get better control of your finances.

One important question is whether consolidation is a better option than bankruptcy. Generally, bankruptcy is a good solution for businesses and individual borrowers who have multiple large debts and are unable to handle them. There are many downsides to declaring bankruptcy, however. First of all, not all debts are discharged. You will lose non-essential possessions and your credit cards, and you won’t have access to financing for some time. This includes loans and mortgage loans. Some types of debt are not discharged, including income taxes, past due alimony payments and child support, resulting from divorce procedures, and court fines. Debts incurred by using fraudulent means such as providing incorrect or false information and writing bad checks are also excluded. Exempt property includes household furnishings, motor vehicles, a percentage of your wages, and life insurance.

Note that if most debts are non-dischargeable, declaring bankruptcy is not a good solution. Moreover, bankruptcy is a complicated process, and the different provinces have different rules to regulate bankruptcy. You may want to use the services of a bankruptcy lawyer who knows the ins-and-outs of declaring bankruptcy.
For more information on consolidation continue reading here: http://www.canadabanks.net/default.aspx?article=Consolidate+Your+Debt

Types of Collateral for a Business Loan

Whether you are a limited liability corporation, a sole proprietorship, or a start-up, expanding your company’s potential requires financing. Financial institutions that provide secured loans will look at your balance sheet, revenues, business credit, equity contributions, and company’s history. Even if you operate a healthy and profitable business and pass a credit check, many financial establishments will require guarantees that the business loan will be paid off in full. Different types of collateral can be used to assure the financial institution that there is an alternative source of repayment. In many cases, the collateral is an owner-occupied home (real estate), but you can use equipment, inventory, deposits, and cash savings.

Generally, there are two types of collateral you can offer – assets that the company has a loan against and its own assets. Cars and homes are commonly used as collateral, but you can use pieces of equipment, motorcycles, and watercraft. Asset-based lending is one way to get financing, especially if you have a big purchase order. Bringing on raw materials, equipment, and additional staff is sometimes necessary to meet the requirements of the client. The purchase order can be used as collateral in such cases.

When applying for a secured loan, you may use deposits or cash savings as collateral. Banks accept personal savings because they are a low risk for the financial institution. This applies to financial accounts such as certificates of deposit. The main advantage of using a financial account as collateral is that banks usually offer a low interest rate. The downside is that the financial institution will take possession of your cash savings in case of default.

Businesses that apply for a secured loan should know that financial institutions are conservative when it comes to valuing assets to be used as collateral. In case of default, the bank has to expend resources to seize the asset and try to sell it. Given that banks are conservative, it pays to ask for an appraisal revue that will assess the accuracy of the appraisal. Finally, it is also possible to obtain an unsecured loan, but banks often charge very high interest rates. For more information you can read this useful article.