If you’ve been faced with significant hardship, financial or otherwise, you may have had trouble keeping up with your bills. In this case, you may qualify for some form of debt relief.

Right up front, we should let you know that there are a lot of fraudsters pretending to be Debt Relief companies. Always do your research on a company before handing over any financial or Social Security information.

Another thing to be aware of is that debt restructuring is incredibly difficult to secure. If you do not have collateral, or the loan wasn’t for a home or other asset, you may have a lot of trouble finding debt restructuring.

How Debt Restructuring Works

The two basic ways to restructure your loans is to work with the company who loaned you the money, or an accredited Debt Relief Company. You will have to make a strong case for why you cannot make your loan payments any longer. This could be due to job loss, a loss in the family, injury, or other major life change.

In the case of a home loan, the bank will usually understand that it’s in their best interest to work with you rather than go through the expensive and time-consuming process of foreclosure. But sometimes, the restructuring means selling your home and giving the bank a portion of the sales.

With personal loans, restructuring may require some form of collateral or lengthening the terms of the loan.

In either case, I highly recommend checking with the National Foundation for Credit Counseling or the Financial Counseling Association of America.

What Factors Affect Restructuring

The following factors can and will affect whether you’re able to obtain a restructured loan, and what the terms might be.

  • If you’ve made previous payments on time
  • Your credit score
  • Value of the assets involved
  • Length of loan left
  • Degree of hardship

No matter what, you should get the help you need as soon as you can. The longer you wait, the worse the debt will get.

About the author 

Greg Lorenzo

Greg is a financial expert who has been advising his audience on loans for over 10 years. He has a wealth of knowledge and experience in the area, and he is passionate about helping people get the best possible deal on their loans. Greg is an expert in negotiating loans, and he has a proven track record of getting his clients the best possible terms. He is also a strong advocate for financial literacy, and he regularly gives workshops and seminars on the topic.

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