Inviting you to know… What is debt restructuring ?

masii invites you to learn… What is debt restructuring?

Debt restructuring is not a scary thing, but it helps debtors who can no longer fulfill their loan agreements with creditors by adjusting debt repayment terms to suit their reduced income or changing debt repayment ability, without waiting for it to become a non-performing loan (NPL). Because if the debt problem is left for too long, it may have worse results than expected, such as being sued, having assets seized, and finding a solution is even more difficult.

Before starting the debt restructuring process, we should start by studying debt restructuring options and thinking ahead to which one is most suitable for our repayment ability. Examples of debt restructuring formats are as follows:

1.  Request for an extension of the debt repayment period 

Or extending the repayment period which will reduce the installments, for example the original contract had a loan period of 10 years with an installment of 10,000 baht per month. The installments had been paid for 7 years, leaving 3 years of installments. However, when the installments could not be paid anymore, the debtor asked to negotiate an extension of the repayment period from 3 years to 5 years in order to reduce the monthly installments to less than 10,000 baht, thus reducing the burden of paying each monthly installment for the debtor.

2.  Refinance 

It is  “changing creditors ” or  “closing debt”  from the original creditor to a new creditor or making a new contract with the original creditor with better conditions, such as a lower interest rate, and then using the money to close the existing debt. But before deciding to refinance, you should consider various fees that may occur, such as mortgage fees, processing fees, property appraisal fees that may occur from changing creditors, making new contracts, including the ability to pay off debts with creditors.

3. Request a reduction in interest rates

This will allow the installments we pay each month to be used to reduce the principal more, and pay off debt faster. However, creditors may have different conditions for considering debt restructuring for debtors, such as considering the age of the debtor, payment history, and ability to repay debts after debt restructuring.

In addition to the above, there are many other forms of debt restructuring or debt repayment terms. You can learn more at  https://www.bot.or.th/covid19/Pages/content/retail/restructuring/default.aspx.

If you don’t know how to start the debt restructuring process, start by contacting your financial institution or creditor company to ask for a way to solve your debt problem together. Then, study the methods or conditions for debt restructuring in various forms. Prepare the required documents or information before entering the debt restructuring negotiation process. Most importantly, you should carefully assess your ability to repay and not accept unachievable debt repayment terms to prevent future problems of being unable to repay your debt. Once you have reached a conclusion, don’t forget to check the debt restructuring contract, including the principal amount, interest rate, or period, to see if it is as agreed. In the future, if the debt restructuring still worsens, you can contact your creditor again to find a way to solve the problem.

Contact channels for various financial institutions

https://www.bot.or.th/covid19/Pages/contact/default.aspx