Debt Restructuring
Adjusting debt terms to avoid default or to improve repayment viability.
Detailed Description
Debt Restructuring
What is debt restructuring?
Debt restructuring is the process of altering the terms of an existing debt agreement to provide relief for borrowers facing financial difficulties.
What are some common methods of debt restructuring?
Common methods include loan modification, refinancing, debt consolidation, forbearance agreements, and debt settlement.
What are the benefits of debt restructuring for borrowers?
Benefits for borrowers include lower monthly payments, reduced interest rates, and a more manageable repayment schedule.
How can debt restructuring impact a borrower's credit score?
Debt restructuring can lead to a temporary dip in credit scores, but successful adherence to new terms can improve scores over time.
When should borrowers consider debt restructuring?
Borrowers should consider it when they are unable to meet debt obligations or anticipate future financial difficulties.