Restructuring of loan debt

«Changing stereotypes that big loans are the end!»

Shakhovets Anastasia

Lawyer in the practice of bankruptcy of individuals and individual entrepreneurs. Specializes in write-off of bank and MFI loans through the bankruptcy procedure.

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Restructuring of loan debt

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Debt restructuring is a change in the terms of the loan agreement between the bank and the borrower. This happens in a situation where the borrower is unable to fulfill his obligations according to the initial terms of the loan.

 

When do banks offer restructuring?

Financial organizations, as a rule, consider the possibility of debt restructuring in the event that the delay in loan payments reaches half a year or more. For banking institutions, it is more profitable to reach an agreement on the revised terms of loan repayment than to recognize the debt as absolutely hopeless and to add the borrower to the list of unscrupulous clients throughout the entire banking system of the state.

Restructuring allows a borrower who finds himself in a difficult financial situation to avoid default. And the bank, in return, gets the opportunity to return at least part of the issued loan funds and interest for their use, albeit on new, more loyal terms.

Debt restructuring tools

During restructuring, the bank can offer the following options:

  • Postponement of loan payments for a certain period of time.
  • Lower interest rate to lower monthly payments.
  • An increase in the total term of crediting to extend payments for a long period.

Restructuring procedure

The restructuring process begins with the borrower's request to the bank to revise the terms of the loan agreement. Specific options are selected individually in each situation. There is also an option to go to court with a plan to restore solvency, but at this stage it is better to involve professional lawyers.

 

Standard debt restructuring schemes

  • Extending the credit term

The credit term can be extended, but not longer than the maximum allowable term for the corresponding credit program.

  • Credit holidays or deferment of payments on the body of the loan

Banks can offer different options for credit holidays.

  • Calculation of the cost of restructuring

For the borrower, an obvious advantage is the ability to repay the debt gradually, while the bank avoids delays and the need to form reserves for problem debt. At the same time, interest on the loan is paid monthly.

  • The most popular method of restructuring

According to bank employees, the most popular method of debt restructuring is the extension of the credit period.

  • Other options

Additional options include a reduction in the interest rate, a grace period (deferral of interest payments), and a one-time partial write-off of the debt.

In general, there are quite a lot of debt restructuring methods. A specific plan is agreed individually for each borrower, depending on his financial situation.

Monitoring of the fulfillment of restructuring conditions

After the restructuring, the bank will carefully monitor the borrower's compliance with the agreed terms. In case of violation of new agreements, the bank can initiate the debt collection procedure in court.

Legal assistance in debt restructuring

If you have encountered problems in repaying debts or need professional legal assistance in matters of restructuring, you should contact the experienced lawyers of Prykhodko and Partners.

The company's specialists have many years of experience in the field of bankruptcy. They will help you in negotiations with banking institutions to change the terms of the credit agreement to more favorable ones for you. Lawyers will carefully study your situation, consider all possible options for restructuring and offer the best solution.

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