Restructuring Your Bank Debt

A few years ago I personally purchased a number of investment properties at a considerable cost and now have a large personal debt that requires servicing. This has put an increased strain on my personal finances, as I struggle to meet the repayments on this loan. Can you offer any advice?

Unfortunately, the economic downturn has led to considerable financial strain for many people and your story is a common one. Many people made investments during the Celtic Tiger years in a rising property market that have now failed to show the desired returns. As a result of this, it has become very difficult for the individuals in question to service these debts. Especially, as the sale of the property is no longer always possible or desirable due to significant negative equity.

When dealing with a situation such as the one you now find yourself in, it is important that you do not shy away from it. This problem requires immediate action to help remedy the situation and cannot be solved by placing your head in the sand and hoping it will go away. Debt problems are easier to solve if you act early and take a proactive approach.

With this in mind, the first step you should now take is to set up a meeting with your bank. It is important to work with the bank in the hope of negotiating a deal that works for both parties. For the most part, banks seek to work fairly and sympathetically with customers who encounter problems in meeting their debt. It may be possible to restructure your bank loans to allow you to meet them based on your current circumstances. This should put you in a stronger position to service the debt.

Before meeting with the bank it is imperative that you put in the necessary preparation. When meeting the bank you should know the exact arrangements of your current bank deal and be fully aware of any security held by the bank in relation to the loans. You should also be armed with any financial information relevant to the case; this might include cash flow projections which clearly highlight the problems you currently face in terms of financing the debt. A budget might also be prepared outlining how you plan to meet the restructured payments.  Your accountant is probably best placed to assist you with both reviewing your current bank deal and providing the necessary financial information. I would also advise that you do not meet the bank alone; again your accountant might be best placed to attend this meeting with you and aid you throughout this process.

Finally, should the process prove successful and a restructuring of debt be agreed upon, it is still important you continue to review your circumstances regularly to ensure that you can continue to meet your obligations.

If you have any further queries in relation to the above or any further queries in relation to your current banking predicament, please do not hesitate to contact RDA Accountants’ for further assistance.