Debt restructuring is used by businesses as an attempt for recovery from high debts. This useful tool adjusts the way payments are made on debts. Restructuring the debts may also include adjusting interest rates and changing the length of grace periods. People choose to have their businesses go through this process if they have become unable to stay on top of their financial situation. It is different from bankruptcy in that it is less expensive and will not take as heavy of a loss of reputation. It also increases the chances the business will succeed once they get back on their feet. Companies that end up filing for Chapter 7 bankruptcy only have a 20% chance of succeeding in the years to follow.
Restructuring debts will mean modifying bill payments. This can involve lowering monthly payments, lowering interest rates, and elongating grace periods. Creditors want to collect their money and therefore are usually open to adjusting the terms of loans so that they can continue to receive payments.
This form of debt repayment is not an option for all businesses. If a business risks debt restructuring and continues to fail, their only option may be bankruptcy. If the business had originally made the choice to file for bankruptcy, they may have already been on the path to recovery at this time. Because of the cloudy middle ground between choosing restructuring debts and filing for bankruptcy, people will seek the advice of an experienced bankruptcy attorney. The attorneys can investigate financial records and help decide if their debts can be negotiated to an affordable payment.