Bad Debt

What is 'Bad Debt' :

Bad debt is debt that is not collectable and therefore worthless to the creditor. This occurs after all attempts are made to collect on the debt. Bad debt is usually a product of the debtor going into bankruptcy or where the additional cost of pursuing the debt is more than the amount the creditor could collect. This debt, once considered to be bad, will be written off by the company as an expense.

BREAKING DOWN 'Bad Debt' :

Most companies make sales on credit as it generally allows them to increase their sales, even though some sales are to customers with less than desirable credit. Companies that do make credit sales will estimate the amount of sales they expect to lose to bad debt, which is found in the allowance for doubtful accounts.
A debtor with a history of bad debts will see their credit rating decline, which makes it difficult for the debtor to access any additional form of credit.

Can you get a Mortgage after a debt agreement?

This question is very much common for the people searching for home loans –

Question : will I be prevented from getting a home loan in the future if I enter into a Debt Agreement or a Personal Insolvency Agreement?

Answer : not necessarily.

It is obvious that it will depend on your current financial condition and the lender as each lender will assess your application differently using different criteria.

A few points you have to keep in mind before signing a Debt Agreement or a Personal Insolvency Agreement:

Both of these agreements will show up on your credit file for seven years from when you first entered into them. Whilst the agreement is still on foot you won’t be able to get new credit.

Know About Different Types of Home Loans in India

Home loans are an attractive and popular means of buying a dream house for most people. In India, the demand for home loans has increased manifold in the last decade. Every day numerous people apply for home loans to own a perfect abode for themselves. The fact thathome loans come with added advantages (like tax benefits) is the icing on the cake.

Lenders provide home loans not only for buying houses but for a variety of related purposes. The home loans market is brimming with diverse home loan products which cater to different needs of individual customers. The following are some popular types of home loans available in the Indian housing finance market:

Land Purchase Loans

Land purchase loans are taken to buy a plot of land on which a borrower wishes to construct his house. Most banks offer up to 85 percent of the price of the land. These loans can be availed for residential as well as for investment purposes. Almost all leading banks offer this loan like ICICI Bank (Land Loan), Axis bank (Loan for land purchase) etc.