This is debt, which is slightly more complicated. Why the control of the value of that asset is not in your hands. And if the market falls, sources devalue that asset because of their own understandings. The impact it has on you is indirect, but it’s direct in terms of repayment of those monies. So in those circumstances, I think we will normally get distressed more because they are not in control of the value of the debt and the value of the assets that the debt has been secured on.
Now, we know there are two types of debt. One is secured, which is mortgages or taking out loans, where there’s a security against an asset of any kind, and the second is unsecured. Now, the secured one is the one that at least guarantees the lender some rights of recovery, whereas the unsecured one is slightly less in the favor of the lenders, slightly more in the favor of the borrower.
But either way, the monies have to be paid back and therefore accumulate debt. Similar circumstances are in credit cards. They will take credit cards on. They’re basically taking on a debt that has been digitally created a digital debt. So the debt isn’t really off a balance sheet, but it’s an amount of money that the bank is allocating to pledge against people’s spending, knowing that card will be repaid by people’s incomes or their cash or their reserve funds.
Now, irrespective of the fact that the money for the bank has been taken from an electronic sump, it still puts you and its back on the credit card holder to pay that money back. And that is where the problem lies, that ultimately you have to know that when you spend money, you are required to pay that money back. Now, debt and the accumulation of debt happen under every level.
People at the lowest level, people running shops and businesses, and then at the highest level, large corporation’s projects the difference being when it’s larger money, money normally is taken from the markets. The markets will give you money based upon your value or the share value of your company. Now, either way, you are raising money for something and you’re using credentials.
That is why in debt, the term credit file or credit rating is extremely important. Lots of people who are in business have to be very mindful of keeping their credit score in check, although we advise that everyone should always be aware of their credit file, so they can always be checking where the credit file is going at any one time.
But nonetheless, it is more prevalent for commercial lending because it could be the difference between a company getting a million and a few million and risk assessment or credit file rating for corporations also takes place. Risk assessment of credit files or companies are made by company’s track record history, their balance sheets, and the annual return.
So they check all the information to see how credible the company is who the owners are, what type of monies they have in their Bank and what type of business they do. I think during Covid-19 most all of that would have been blown away Because everybody’s high risk Because there wasn’t much business activity I’m not sure what they’ve done for that something we could check up how they realign the credit file ratings while Slowdowns may not because most companies weren’t trading.
They’ll probably rely on the advanced symbol loans to keep on trading. How much of an impact, whatever that had on the company and its rating. We’ll probably research into that and give you some feedback. So we move on to helping people who have debt problems. Now in this present environment, I think it’s going to be quite probable everybody coming to that New Year’s party Is going to have some issue or not.
The question is how do you gain confidence of a person you know who will take your advice? How can you help them in that way?
Well, one of the first things we know about problems is that it has a tremendous psychology on the debtor. To the extent that they will clamor in, they will become somewhat introvert and they will wish away the problem. Get in touch with us to find out more
