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Restructuring and consolidating debt

Gaining a clearer view of your balance sheet

To help progress toward your long-term financial goals, take a few minutes to periodically review your current balance sheet. Your balance sheet consists of assets (things you own) and liabilities (money you owe). Understanding your assets AND your liabilities can reveal opportunities for managing both more effectively.

Common liabilities may include student loans, car loans, mortgage payments and credit card balances. Your financial advisor can help you evaluate your current liabilities and suggest opportunities for retiring debt or restructuring debt if it makes sense for your goals and individual situation.

Before retiring or restructuring debt, take a few minutes to talk to your financial advisor about the most sensible way to approach streamlining your liabilities. Just because you can restructure debt doesn't always mean you should, but in many cases there may be opportunities to lower your borrowing costs while strengthening your overall balance sheet.

The Loan Management Account® (LMA® account)1 offered by Bank of America, N.A. (“Bank”) is a flexible demand line of credit that can be used for almost any purpose. Your LMA account may allow you to consolidate outstanding loans into a single loan facility for ease of payments and cash flow management. What's more, for each loan balance you transfer to your LMA account, you can choose the type of loan based on your specific borrowing or cash flow needs.

When to consider restructuring debt

Goals and priorities Options
You want to protect yourself against rising interest rates Locking in borrowing costs at a lower, fixed rate can help in a rising rate environment. You may also have the option to move to a lower variable rate loan through your LMA account.
You're wondering if you may be eligible for a lower interest rate through a secured loan Using eligible securities as a collateral through an LMA account can potentially help lower your overall borrowing costs by giving you access to lower interest rates than may be available through an unsecured loan.
You'd like the convenience of managing multiple loans through a single account and online sign-on An LMA account allows you to manage multiple loans through a single account and online portal. You can easily view, manage and pay loans online.
You'd like more flexibility in accessing your available credit Your LMA account offers a flexible line of credit, with funds generally available within a few business days.


When to think twice or get more information before restructuring debt

Current situation Considerations
You're in the last 10 years of a 30-year, fixed rate mortgage Your current mortgage payments are mostly going toward retiring principal debt. If you refinance now, your new mortgage payments will mostly be going toward paying interest.
Your loan has early repayment penalties Make sure that the new lower rate you're earning by restructuring debt will compensate for any early repayment penalties you may face.
You'd potentially be moving from a loan with tax-deductible interest to one where the interest is non-tax-deductible Talk to your tax advisor about how restructuring debt may impact your overall tax bill before making any final decisions.

Risks of LMA Borrowing
Securities-based financing involves special risks. You should review the LMA Loan Agreement and related documents and disclosures carefully and consult with your own independent tax and legal advisors.

  • A decline in the value of your collateral assets may require you to provide additional funds or securities to avoid a collateral maintenance call. You can lose more funds than are held in the collateral account. The LMA account is a full-recourse loan and you will be liable for any deficiency.
  • The Bank can force the sale or other liquidation of any securities or other investment property in the collateral account and, unless otherwise required by law, can do so without first contacting you.
  • You are not entitled to choose which securities in the collateral account are liquidated or sold.
  • The Bank can change its collateral maintenance requirement at any time without notice to you.
  • You are not entitled to an extension of time to satisfy the Bank’s collateral maintenance requirement.
  • There may be adverse tax or other consequences to you if securities are sold or otherwise liquidated by the Bank.
  • The LMA account is an uncommitted facility, although loans to individuals and trusts may be committed in an amount not to exceed $100,000. The Bank may demand full or partial repayment at any time and any commitment may be immediately terminated.
  • For fixed-rate advances and term loans, principal payments made in advance of the end of the applicable fixed-rate period, whether voluntarily or involuntarily, (due to demand or liquidation by the Bank,) may be subject to a substantial breakage fee as determined by the Bank.
  • Some restrictions on the use of LMA account proceeds may apply under the terms of the loan documents and applicable laws and regulations.


Borrowing money often makes sense to meet a broad range of objectives. Sometimes you may want to borrow funds to maintain liquidity, while other times you may want to borrow because long-term financing costs are relatively low. In addition, there may be times you may want to borrow to reflect the lifespan of the object being financed and enjoyed, such as a house or a piece of investment real estate. Start a conversation with your financial advisor today about when to borrow, when to restructure debt and ways to strengthen your overall balance sheet.

Three questions to ask your financial advisor

  1. What debts should I pay down first?
  2. How would a change in interest rates impact my overall balance sheet?
  3. How much money could I potentially save by restructuring or consolidating debts?

Learn more
Talk to your Merrill Lynch financial advisor about a broad range of liquidity options available through Merrill Lynch and Bank of America. You can also read more about the LMA Account here at

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1 The Loan Management Account (LMA account) is a demand line of provided by Bank of America, N.A., Member FDIC. Equal Opportunity Lender. The LMA account requires a brokerage account at Merrill Lynch, Pierce, Fenner & Smith Incorporated and sufficient eligible collateral to support a minimum credit facility size of $100,000. All securities are subject to credit approval and Bank of America, N.A. may change its collateral maintenance requirements at any time. Securities-based financing involves special risks and is not for everyone. When considering a securities-based loan, consideration should be given to individual requirements, portfolio composition and risk tolerance, as well as capital gains, portfolio performance expectations and investment time horizon. The securities or other assets in any collateral account may be sold to meet a collateral call without notice to the client, the client is not entitled to an extension of time on the collateral call and the client is not entitled to choose which securities or other assets will be sold. The client can lose more funds than deposited in such collateral account. The LMA account is uncommitted and Bank of America, N.A. may demand full repayment at any time. A complete description of the loan terms can be found within the LMA account agreement. Clients should consult their own independent tax and legal advisors. Some restrictions may apply to purpose loans and not all managed accounts are eligible as collateral. All applications for LMA accounts are subject to approval by Bank of America, N.A. Equal Housing Lender.


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