Debt restructuring is renegotiating the terms of an existing debt to make it more manageable for the borrower, often involving extended repayment periods or reduced interest rates.

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Why is debt restructuring important?

Debt restructuring helps struggling borrowers avoid default by renegotiating debt terms, providing relief through extended repayment periods or reduced interest rates, and improving financial stability.

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An easy way to understand debt restructuring is:

When a person owes a lot of money and works with their lender to change the loan terms, like extending the repayment period or lowering the interest rate.

How does Debt restructuring Works & Types

Debt restructuring involves renegotiating debt terms with lenders to make repayment more manageable. This can include extending repayment periods, reducing interest rates, or partially forgiving debt.

Types include debt rescheduling (extending repayment), debt reduction (reducing principal or interest), and debt-to-equity swaps (converting debt to equity).

Debt restructuring played a crucial role in our survival during the initial challenging months. By renegotiating our debt terms, we achieved lower interest rates and extended payment periods, easing our cash flow during critical periods of business development and client base expansion.