Ways to Restructure Debt – Restructuring Advisory Group

debt restructuringRestructuring of debt refers to the process of revising the terms of a loan agreement by the lender and the debtor. This is usually required if the debtor may default on the payments due to financial difficulties. Generally, it is the debtor who requests for a restructuring of the loan, but once in a while it may be the lender who suggests this as an option if it is obvious that the debtor is having trouble making payments on time. There are different ways in which debt can be restructured. Let’s look at a few of them.

Home Equity and Personal Loans

You can pay off your debt using a home equity or personal loan. The thing here is that you can use a loan which has a lower interest rate to pay off loans that have higher interest rates. You may be able to get a loan that has monthly payment installments that fit into your finances if you try for one that has a lower rate of interest along with a longer term. This should not affect your credit score, as long as you are making the minimum payments every month.

Credit Card Counseling

If you want to bring your credit card debt down to an amount that is manageable, this is a very valuable tool for you. You can approach credit card counselors for help with better techniques to manage your money and financial goals that are feasible. Not only do these counselors give you advice and bring their skills with managing money into play, they also help out with specific steps that will help manage your debt such as declaring bankruptcy or filing for consolidation of debt.

Debt Consolidation

This is a good method to use if you have many different loans and you’re trying to pay them all off. The problem here is obvious. You have different payments and different interest rates, which means that your financial situation ends up being quite disorganized. This, in turn, results in you missing payments or being unable to keep up with all of them and financial hardships. When you consolidate your debts, you are essentially bringing together all your smaller debts and changing them into one large debt. You will have a fixed rate of interest and monthly payments on this debt. In addition, if your debt is consolidated, you can pay off the balance of the principal much faster, which means that you don’t have to pay as much as you would have had to if you were making multiple payments.

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