Debt Restructuring
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Definition of Credit Restructuring
Debt restructuring refers to a financial process that involves modifying the terms and conditions of existing debt obligations between a borrower and a lender.
It is typically undertaken when a borrower is facing financial difficulties, making it challenging to meet their debt repayment obligations as originally agreed upon.
Debt restructuring aims to provide relief to the borrower by adjusting repayment terms, such as lowering interest rates, extending the loan tenure, or granting a temporary payment holiday.
The goal is to make the debt more manageable for the borrower and increase the likelihood of successful repayment.
What is Debt Restructuring?
Debt restructuring is a method employed by lenders to assist borrowers who are experiencing financial hardship or facing difficulties in servicing their existing debt.
It involves modifying the terms of the debt arrangement to make it more feasible for the borrower to meet their repayment obligations.
Creditors may agree to restructure loans, mortgages, or other forms of debt by altering interest rates, extending the loan period, or even forgiving a portion of the outstanding debt.
By offering more flexible repayment terms, credit restructuring aims to prevent defaults and bankruptcies while providing financial relief and an opportunity for borrowers to regain stability and resume regular debt servicing.
