If you are in debts that are becoming hard to repay, you must be thinking of debt relief options. For a debtor with outstanding amounts, it is essential to decide correctly which option to select - bankruptcy or debt consolidation. To decide on “which is better bankruptcy or debt consolidation?” one needs to understand what are debt consolidation and bankruptcy all about.
Debt consolidation is a debt repayment option where you take the help of a debt consolidation firm. This debt consolidation firm negotiates with your creditors on your behalf to reduce the interest rate. You will need to pay an amount for all your debts to the debt consolidation firm who will pay to the individual creditors on your behalf. Choosing a debt consolidation program can affect your credit both ways. Some lenders can consider the fall in credit score as a “negative mark” whereas others can appreciate your willingness to repay, even if through reduced interest rates.
Bankruptcy, on the other hand is a declaration of your inability to repay. It is a better option for those who are neck deep in debts. You can file for chapter 7 or 13 accordingly. In chapter 7, your assets are liquidated to pay off the debts. Chapter 13 allows you to repay your debts through a payment scheme under the protection of the court. A repayment plan prepared by the debtor is approved by the creditor and a court trustee. However, the debtor’s credit gets affected if he files Chapter 7 bankruptcy and not Chapter 13.
It is always better to try out ways of repaying your debts, either by a self repayment plan or through debt consolidation program. When you choose a consolidation program, it does have a positive affect on your credit score in the long run. Therefore, when you think about “which is better bankruptcy or debt consolidation?”, consider the credit affects of each process as well as analyze your financial situation. Depending upon how much you can pay and how your credit will be affected, you can choose to file bankruptcy or enroll for debt consolidation program. If required, you can also take the help of professionals who will guide you to make the right choice.
Thursday, November 20, 2008
Monday, November 10, 2008
Low-interest loans availed by 300 women of SHGs
President Prtibha Patil had launched in the city a scheme bringing down the interest rate to four per cent, after the launch of the scheme around 300 women from self-help groups (SHGs) have taken loans up to Rs 10 lakh from nationalized banks in the district since October 10.
Till now twenty-five SHGs have been able to get the loan sanctioned while 15 are in the final stages of approval. Loan seekers have submitted applications for poultry, organic, goat and dairy farming.
Senior district coordinator T L Shere of Mahila Arthik Vikas Mahamandal (MAVIM) is one of the key agencies coordinating the scheme in the district said, “The scheme will enable women to take on more entrepreneurial activities and repay faster”.
He said Bank of Maharashtra, Bank of India, Central Bank, State Bank of
The scheme has received such a good response while awareness is still very low. Pune District Collector Chandrakant Dalvi told that he will be organizing a meeting with bank representatives, followed by meetings in every taluka.
Shere said so far banks are offering loans at 9-11 per cent, therefore nearly 17 lakh women from rural areas from a total of 1.42 SHGs have been benefited from the scheme.
He added, “Around 45,000 SHGs will stand to get Rs 50,000, another 72,000 will get Rs 1 lakh and 18,000 SHGs will get Rs 2 lakh, with the state taking on an interest subsidy of nearly Rs 129.01 crore in three years”.
On the other hand a senior officer with a nationalized bank said they are confident of repayment going by the past records of SHGs. He said, “We will be only too willing to help these women”. Manisha Kale of Pune’s Garib Nawaz Bachat Gat, was the one to get the first disbursal of Rs 2 lakh from the president, hence she used the money on planning for dairy farming. “It should start soon. We have mobilized our group,” she said.
Monday, November 3, 2008
Getting Education loans for foreign studies not to be easy for next academic session
Now it will be difficult for the aspiring students who might be planning for higher studies in abroad from the next academic session.
The multinational companies have started handing out pink slips almost every day and job prospects are also getting bleak in the West, and banks are also likely to tighten their education loan norms. Banks are also considering of lowering the limit for collateral requirement for destinations like the
Adding to the worries the students will be going to find difficulty in getting education loan for second and third step universities in these countries. As per HDFC bank sources, it has already zeroed lending in aviation sector where it will be conventional in its lending approach to students.
A senior banker, who refused to be identified, told that the step taken by the bank will be logical for the banking system, which is already facing chin music because of downslide in the equity markets. “It’s always better to prepare a disaster plan rather than wait for the disaster to strike, and then plan. Not only will the banks benefit, but students will also be saved from an uncertain future,” the banker said.
Sujan Sinha, senior vice-president, retail assets, Axis Bank agreed with this. According to him lot will depend on the existing macroeconomic environment globally when the new education season will begin next year. “Though it’s a bit premature to comment, but considering the uncertainty surrounding the Western economies, the possibility of banks getting stringent about education loans can’t be ruled out,” he said.
Sources in HDFC Bank conveyed that they are already taking precautions, in terms of lending. "There are always some sectors which are riskier than others. In the last few months, aviation has been identified to be one such sector, and hence we were cautious while disbursing educational loans in this sector," the bank official said.
While academicians are of the view that a majority of students have plans for traveling abroad for master courses and foreign degrees. In foreign the courses offered are usually of 12-18 month duration. This is further going to add to the agony of the students as the job market is improbable to stabilize in the near future.
Even Anindya Sen, professor at the IIM, Kolkata, doesn’t rule out a possible dip in the numbers. "Those students going to lesser known universities will find it difficult to fund their education, as the banks are likely to be extra careful while sanctioning education loans," he said.
Another end result will be a major shift from the financial sector to other areas of study. "Looking at the job market, we will also see a sect oral shift over the next couple of years. Not many students will go abroad for degrees in financial studies. There will also be a slight dip in the salary packages," he said.
Rupee is depreciating rapidly against the US dollar adding to the hardships of those weaving dollar dreams. Now the cost of the loan of $25,000 (around Rs 10 lakh) has increased to Rs 12.5 lakh as compared to six months before. However currently, in case of a loan amount exceeding Rs 4 lakh majority of the banks ask for collateral. The collateral can be in the shape of property, FDs, NSCs, life insurance policy or any other instrument, which the banks find appropriate.
A Syndicate Bank official also points towards the rise in defaults. "If we are faced with such a problem, we have leverage and we may package the loan differently and offer the opportunity of postponing certain payments or making balloon payments in later part of the loan. But they will have to repay the loan within the specified time period. It will also depend on how genuine the case is."
Monday, October 13, 2008
Education loan portfolio on increase in Kerala banks
By the year end,
As per the figures released at the two-day State Level Bankers Committee meeting which ended on Tuesday, 12,958 education loans to the tune of Rs.4.95 billion ($110 million) were sanctioned during the period under review, which is up from 4,132 loans worth Rs.983.4 million for the year ended June 30, 2007.
While the banks distributed 20,085 loans to tune of Rs.2.64 billion last year as compared to 5,383 loans worth Rs.573 million in the previous year.
According to the report 75 percent of the total applications for education loans came from Kottayam, Thiruvananthapuram and Ernakulam districts, and loans were taken for pursuing nursing courses in Karnataka and Andhra Pradesh.
The education loans have been categorized into two slabs. Loans up to Rs.400,000 do not require any collateral security and the interest rate is 13 percent for studies within the country and 13.5 percent for studies abroad.
Whereas loans above Rs.400,000 require collateral security and have an interest rate of 13.5 percent for studies within the country and 14 percent for studies abroad.
When bank approves the loan, the fees are directly sent to the institution as required by them.
The repayment of the principal amount starts after one year of completion of the course or six months after getting a job, whichever is earlier.
Kerala-based State Bank of Travancore (SBT), which distributed 3,673 loans valued at Rs.800 million, had lead from the front. By the year ended June 2007, the bank has distributed 1,636 loans worth Rs.148.8 million.
Monday, September 15, 2008
NSCB to launch new scheme ‘Education Loan’
The Nagaland State Cooperative Bank Ltd (NSCB) will soon be launching anew scheme called education loan. Speaking at the sensitization program on banking at Baptist High B.K. Thadani, Managing Director, NSCB Ltd said, “We are going to introduce education loan soon”. Thadani informed that NSCB offers service to credit the needs of primary agriculture cooperative societies in the state.
“The Bank has been playing pivotal role for the socio-economic development of the people in our state for poverty elevation,” he said. Bank has been offering services from the last 41 year; the NSCB has offered great help to the rural people particularly to the farmers. In addition, the bank has been carrying out all possible activities to create awareness by developing the habit of thrifts amongst the rural people and extending banking facilities through its branch network spread all over the state.
Times New Roman;font-size:100%;">He also told that the extent of reaching of financial services to the population of the state was very bleak; he added that only 21 percent of the total population has a bank account while the vast majority of 79 per cent population does not have bank account.
“There is tremendous scope for financial coverage if we are to improve the standard of life of the deprived classes of the people,” he said. He also stated that bank has taken possible steps so that persons belonging to low income groups both in urban and rural areas do not face difficulties in opening bank accounts due to procedural hassle, therefore the KYV procedure for opening accounts has been simplified for those persons with balance not exceeding Rs. 50,000 and credit in the accounts not exceeding Rs. 100,000 in a year.
“This (NSCB) is the only bank catering the need of rural masses,” he said. He added to encourage the students to know the value of banking, provisions have been made for the students to open their bank account and get the benefit. Also speaking on the occasion, Kekhwengulo Leah, Board of Director, NSCB Ltd, Phek district affirmed that the bank has been providing best services to rural people as well as financing the youngsters in self-employment related activities.
"If you want to become a successful person, you must know how to manage and how to save the available resources,” he told the students. Presiding over the function, Rajuselie Lhousa, Board of Director, NSCB said the main aim of the program is to make the students aware about the function of the bank and variant facilities being made available to the people.
Earlier, Isaac John, vice principal, Baptist High said chanting prayer while Medophrenuo and Vilalie Zaputuo-u presented special number. The function concluded with vote of thanks proposed by Pankaj Bhattacharjee, Branch Manager, Kohima (Main Branch)
Wednesday, September 10, 2008
J&K Bank gives more concessions in educational loan to its state students
In J&K state the education sector is lacking behind in state affairs. The literacy rate is very disappointing; according to figures it is the third lowest with 55.52%, after Bihar and Jaharkhand as against all India rates of 65%. Even though in state the educational facilities have expanded considerably but the literacy rate has failed to keep up with the pace with the passing time.
In fact the gender wise also the gap in literacy continues as high as 23.6%. Precisely, there are lots of evident deficiencies, which have contributed a lot to the mess in the state’s education sector.
In the midst of this scenario, there is one more fact that there has been a considerable improvement in indicators like enrolment ratio, reduction in drop out rate retention etc. But for most of the parents it is very difficult to impart higher education to their children due to increasing cost of education. Even though there is educational loan scheme to meet the financial requirements to help students to pursue higher education but the ceiling in the scale of finance has broken the dreams of students.
However a traditional educational loan scheme with almost uniform features is available with all the banks. But, J&K Bank has move forward by taking up certain initiatives to improve upon the educational loan scheme, which was introduced in 1998, so that students in the state don’t suffer because of unavailability of finances to pursue higher education. Not only the ticket size of the loan scheme has been improved, new courses have been added over the years and all these have been brought under the ambit of the scheme. More provisions have been added to give relaxations to the students while obtaining loan under the scheme.
The revised scheme has given a big relief to the student’s community, as the ceiling on the quantum of finance has been increased from Rs.7.50 Lacs to Rs.10 Lacs for studies in India whereas for studies abroad, the loan limit has been increased by Rs. 5 Lacs, from Rs.15 Lacs to Rs.20 Lacs.
Usually, after taking loan under the scheme, the borrowers have to repay the loan after completing the study. Though there is a repayment holiday of course period and one year or 6 months after getting job, whichever is earlier? After that, the loan has to be repaid in 5-7 years. Moreover it is mandatory for the borrower to pay the accrued interest monthly during the repayment holiday period.
But under the revised scheme, the borrower has an option. The accrued interest during the repayment holiday period will be added to the principal loan amount and will be loaded in the Equated Monthly Installments (EMI) fixed by the bank, which means, the borrower doesn’t have to make repayment during the study period. Yet, the borrower can earn a concession of one per cent in rate of interest, in case he decides to repay the accrued interest monthly during the study period.
Under the revised scheme the range of interest rate is 10.50% to 14.50% depending upon the quantum of loan. And during the repayment holiday, the borrower could be charged simple interest.
Further concessions have been introduced in the scheme for talented students pursuing courses in IIT, IIM, and Indian school of Business, Hyderabad will not have to give tangible collateral security for loans up to Rs.10.00 Lacs. As well, a concession of 0.50% in the rate of interest will be allowed for students pursuing their degrees from these institutes. While for others loans above Rs.7.50 Lacs will be given against the tangible collateral security of suitable value.
The regular Degree/Diploma courses like Aeronautical, pilot training, shipping etc., approved by Director General of Civil Aviation/Shipping have also been included in the scheme. In addition, courses offered in India by reputed foreign universities, evening courses of approved institutes and computer certificate courses of reputed institutes accredited to Department of Electronics or institutes affiliated to university have also been taken under the ambit of the scheme. The scheme has also included provisions for employed persons who intend to improve their educational qualification and /or to receive training in modern technology in India or abroad, can also be assisted under the scheme given the education / training received by them offer prospects of their better employment.
Other expenses such as travel expenses/ passage money for studies abroad, insurance premium for student borrower and any other expense required to complete the course - like study tours, project work, thesis, etc, will also be covered by the loan. In the normal conditions, the bank while evaluating the loan will look into the future income prospects of the student. But, where required, the resources of parent or guardian could also be taken into account to evaluate re-payment capability.
In some of the foreign universities there is a requirement that the students need to submit a certificate from their bankers about the sponsors’ solvency/ financial capability, with a view to ensure that the sponsors of the students going abroad for higher studies are capable of meeting the expenses till completion of studies. Banks can issue such capability certificates after the applicant submits financial and other supporting documents to ascertain the capability / solvency. The banks will dispose the loan applications within a period of one month.
For primary education, the Bank has designed a loan scheme - Budshah Primary Education Loan scheme. The scheme has been designed to provide a financial cushion for parents so that then can provide even Pre- Primary schooling to their children studying in nursery, lower kindergarten and upper kindergarten. In addition, scheme will also cater to the needs of students pursuing B Ed and M Ed courses.
In fact the gender wise also the gap in literacy continues as high as 23.6%. Precisely, there are lots of evident deficiencies, which have contributed a lot to the mess in the state’s education sector.
In the midst of this scenario, there is one more fact that there has been a considerable improvement in indicators like enrolment ratio, reduction in drop out rate retention etc. But for most of the parents it is very difficult to impart higher education to their children due to increasing cost of education. Even though there is educational loan scheme to meet the financial requirements to help students to pursue higher education but the ceiling in the scale of finance has broken the dreams of students.
However a traditional educational loan scheme with almost uniform features is available with all the banks. But, J&K Bank has move forward by taking up certain initiatives to improve upon the educational loan scheme, which was introduced in 1998, so that students in the state don’t suffer because of unavailability of finances to pursue higher education. Not only the ticket size of the loan scheme has been improved, new courses have been added over the years and all these have been brought under the ambit of the scheme. More provisions have been added to give relaxations to the students while obtaining loan under the scheme.
The revised scheme has given a big relief to the student’s community, as the ceiling on the quantum of finance has been increased from Rs.7.50 Lacs to Rs.10 Lacs for studies in India whereas for studies abroad, the loan limit has been increased by Rs. 5 Lacs, from Rs.15 Lacs to Rs.20 Lacs.
Usually, after taking loan under the scheme, the borrowers have to repay the loan after completing the study. Though there is a repayment holiday of course period and one year or 6 months after getting job, whichever is earlier? After that, the loan has to be repaid in 5-7 years. Moreover it is mandatory for the borrower to pay the accrued interest monthly during the repayment holiday period.
But under the revised scheme, the borrower has an option. The accrued interest during the repayment holiday period will be added to the principal loan amount and will be loaded in the Equated Monthly Installments (EMI) fixed by the bank, which means, the borrower doesn’t have to make repayment during the study period. Yet, the borrower can earn a concession of one per cent in rate of interest, in case he decides to repay the accrued interest monthly during the study period.
Under the revised scheme the range of interest rate is 10.50% to 14.50% depending upon the quantum of loan. And during the repayment holiday, the borrower could be charged simple interest.
Further concessions have been introduced in the scheme for talented students pursuing courses in IIT, IIM, and Indian school of Business, Hyderabad will not have to give tangible collateral security for loans up to Rs.10.00 Lacs. As well, a concession of 0.50% in the rate of interest will be allowed for students pursuing their degrees from these institutes. While for others loans above Rs.7.50 Lacs will be given against the tangible collateral security of suitable value.
The regular Degree/Diploma courses like Aeronautical, pilot training, shipping etc., approved by Director General of Civil Aviation/Shipping have also been included in the scheme. In addition, courses offered in India by reputed foreign universities, evening courses of approved institutes and computer certificate courses of reputed institutes accredited to Department of Electronics or institutes affiliated to university have also been taken under the ambit of the scheme. The scheme has also included provisions for employed persons who intend to improve their educational qualification and /or to receive training in modern technology in India or abroad, can also be assisted under the scheme given the education / training received by them offer prospects of their better employment.
Other expenses such as travel expenses/ passage money for studies abroad, insurance premium for student borrower and any other expense required to complete the course - like study tours, project work, thesis, etc, will also be covered by the loan. In the normal conditions, the bank while evaluating the loan will look into the future income prospects of the student. But, where required, the resources of parent or guardian could also be taken into account to evaluate re-payment capability.
In some of the foreign universities there is a requirement that the students need to submit a certificate from their bankers about the sponsors’ solvency/ financial capability, with a view to ensure that the sponsors of the students going abroad for higher studies are capable of meeting the expenses till completion of studies. Banks can issue such capability certificates after the applicant submits financial and other supporting documents to ascertain the capability / solvency. The banks will dispose the loan applications within a period of one month.
For primary education, the Bank has designed a loan scheme - Budshah Primary Education Loan scheme. The scheme has been designed to provide a financial cushion for parents so that then can provide even Pre- Primary schooling to their children studying in nursery, lower kindergarten and upper kindergarten. In addition, scheme will also cater to the needs of students pursuing B Ed and M Ed courses.
Sunday, September 7, 2008
ICICI Bank slow in increasing education loan segment
The government has been asking the public sector banks to sanction more and more education loans, but ICICI Bank, the country’s largest private sector lender, has slowed down the portfolio under the segment.
At the 14th AGM held at Vadpdara last month, K V Kamath, chief executive officer of ICICI Bank, informed the bank is ‘hesitant’ to get into increasing quantum of education loans because it is difficult to handle it in the context of collection.
The education loan portfolio requires a minute of AGM posted on the Bombay Stock Exchange last week.
He had said it is part of the overall strategy and bank sees more opportunities in corporate business vis-à-vis retail. “The growth in the retail business has been impacted by higher levels of interest rates and property prices in cases of mortgage loans,” Kamath added. Moreover at present, the interest rate on education loans is about 12%.
Earlier during the month, finance minister P Chidambaram had informed that in the world India was the only country where education loan was given on such a large scale, to about 14 lakh students. He added about Rs 20,000 crore was disbursed as education loans last year.
According to the figures as on March 31, 2008, the total outstanding of education loans stood at Rs 20,547 crore against Rs 15,209 crore as on March 2007, there has been a growth of 35%. In future the portfolio of education loan will grow high as education cost in the country is increasing.
As per the reports of the survey conducted by an industry chamber, since 2000 school expenses for a single child, excluding tuition fees, have gone up from Rs 25,000 to Rs 65,000 per annum.
School costs have also gone up more than double the rate of present inflation level, which stands out to be at a 13-year high of over 12%, prompting parents to do timely planning for their child’s education.
The government has been taking many steps so that wide section of students can avail education loans.
One of the major hurdles faced by students to get education loan, especially the students with financially weaker background, is the collateral and co-applicant clause attached with education loans in the country.
If the loan amount exceeds Rs 4 lakh, most of the banks ask for collateral, such as property, fixed deposits or any other instrument that is found suitable.
At the 14th AGM held at Vadpdara last month, K V Kamath, chief executive officer of ICICI Bank, informed the bank is ‘hesitant’ to get into increasing quantum of education loans because it is difficult to handle it in the context of collection.
The education loan portfolio requires a minute of AGM posted on the Bombay Stock Exchange last week.
He had said it is part of the overall strategy and bank sees more opportunities in corporate business vis-à-vis retail. “The growth in the retail business has been impacted by higher levels of interest rates and property prices in cases of mortgage loans,” Kamath added. Moreover at present, the interest rate on education loans is about 12%.
Earlier during the month, finance minister P Chidambaram had informed that in the world India was the only country where education loan was given on such a large scale, to about 14 lakh students. He added about Rs 20,000 crore was disbursed as education loans last year.
According to the figures as on March 31, 2008, the total outstanding of education loans stood at Rs 20,547 crore against Rs 15,209 crore as on March 2007, there has been a growth of 35%. In future the portfolio of education loan will grow high as education cost in the country is increasing.
As per the reports of the survey conducted by an industry chamber, since 2000 school expenses for a single child, excluding tuition fees, have gone up from Rs 25,000 to Rs 65,000 per annum.
School costs have also gone up more than double the rate of present inflation level, which stands out to be at a 13-year high of over 12%, prompting parents to do timely planning for their child’s education.
The government has been taking many steps so that wide section of students can avail education loans.
One of the major hurdles faced by students to get education loan, especially the students with financially weaker background, is the collateral and co-applicant clause attached with education loans in the country.
If the loan amount exceeds Rs 4 lakh, most of the banks ask for collateral, such as property, fixed deposits or any other instrument that is found suitable.
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