The concept of restructuring is very extensive and most often refers to a change in the economic structure of the enterprise, which leads to an increase in its efficiency or functionality. In the financial context, however, one can talk about a restructuring loan.
What is it and who is it for?
Restructuring loan is a loan that is intended to help a customer who is already repaying a bank loan in paying installments on time. It aims to change the repayment terms at the same bank due to the worsening financial situation of the borrower.
Specific offer from a bank
Loan or a restructuring process of restructuring the loan is a financial service offered to banks, which aims to change the repayment terms of the loan current. Restructuring can often be the only solution to customer financial problems that could lead to a loss of financial liquidity and to insolvency and falling into a spiral of debt.
When a restructuring loan is taken, the terms of repayment of existing liabilities change. The bank granting such a loan modifies the credit terms and adjusts them to the client’s financial possibilities. These may be much smaller than when the loan was taken. The repayment schedule is changing and in the majority of cases the restructuring leads to the extension of the loan repayment period, which, unfortunately, causes an increase in interest and total loan costs.
The restructuring loan is not a completely new loan for the borrower, as is the case with consolidation and refinancing loans. So the lender doesn’t change.
Who will benefit from credit restructuring?
Banking law guarantees all borrowers a chance to restructure the loan. An application for restructuring may be submitted by anyone in accordance with Article 75c of the Banking Act of August 29, 1997. The bank is obliged to accept such a request and should enable debt restructuring by changing the loan repayment terms or terms, provided that it is justified on the basis of the bank’s assessment of the financial and economic situation in which the borrower finds himself.
Most likely, the person who already has debts in a given bank and has ceased to pay the loan installments will have no chance of restructuring. Restructuring should be applied for when we know that we will have financial problems, which will most likely prevent us from paying off principal and interest installments, but we are still meeting our obligations to the bank.
This action will also cause the bank to consider the client as a reliable and trustworthy borrower and willingly renegotiate the terms of the contract as part of the loan restructuring. It will be in his interest that the customer be able to pay the installments on time and finally meet his obligations, even if it would happen much later than originally assumed in the loan agreement.