In our lives there are often random situations that can be a source of difficulty in paying off current debt. Job loss, termination of cooperation with contractors, serious illness requiring funds for treatment. In this situation, a good way is to inform the bank about our problems. In this way, we will be offered debt restructuring, ie a change in repayment terms. This solution is beneficial for both sides.
Why is debt restructuring worth choosing?
Debt restructuring brings only benefits for both the creditor and the debtor. The bank does not have to take legal steps and thus lose its funds. In turn, the debtor will avoid recovery and the bailiff’s visit. The debt will continue to be repaid, but on such terms that will enable the repairer to improve his financial position. So, in cases where sudden random situations prevent us from paying off our debts, we should go to the bank as soon as possible and talk about possible restructuring options.
The most popular methods of debt restructuring
The basic option is of course suspension of repayments. In this way, we gain several months to improve our financial situation. If we were dismissed from work, we have time to find a new job that will allow us to continue paying off the debt. Another way is to grant a working capital loan on your current account, which allows you to maintain financial liquidity.
One of the most popular options is of course debt consolidation. This method is intended for people who have several financial obligations. A consolidation loan allows you to pay off all open debts and then pay back one smaller installment. The repayment deadline is also extended. Of course, in this option we have to count on incurring higher total costs for the financing period. Nevertheless, consolidation allows you to organize your financial situation and also feel the significant difference in the monthly installment.
Companies can achieve debt restructuring by entering into direct negotiations with creditors to reorganize the terms of their debt payments. Debt restructuring is sometimes imposed upon a company by its creditors if it cannot make its scheduled debt payments.
Debt restructuring is typically a better option for people with good to excellent credit who have sufficient income to make consistent monthly payments