Loan restructuring– a procedure involving revision of conditions loan agreement if the borrower encounters serious difficulties at the stage of debt repayment. Timely debt restructuring individual allows you to reduce the amount of the monthly payment, reduce the financial burden and restore solvency.
Restructuring methods:
- Changing the currency of the problem loan;
- Adjustment of the monthly payment schedule;
- Reduced interest rates and commissions;
- Partial write-off of fines and other charges;
- Extension of the contract;
- Credit holidays – deferment of payments.
The procedure involves an analysis by the creditor of the current situation in relation to the debtor’s financial obligations. Acceptable interest rates, amounts and payment schedules are calculated, with the help of which it is possible to restore the client’s solvency. In fact, the very essence of restructuring is to find possible ways to reduce the risk of bankruptcy of a citizen.
Reasons for restructuring:
- Sharp fluctuation exchange rates on foreign currency loans;
- Loss of the borrower's main source of income;
- Recognition of the debtor as incompetent or limited in capacity;
- The occurrence of unforeseen expenses and material losses;
- Borrower use maternity leave for child care;
- Conscription into the army for compulsory service in the RF Armed Forces;
- Court verdict on punishment in the form of imprisonment.
Note! The decision on the possibility of restructuring is made by the creditor individually. The organization has the right to require documentary evidence of the financial insolvency of the borrower.
Documents for loan restructuring
Each creditor puts forward its own list of requirements for the client initiating restructuring.
Main documents:
- A copy of the borrower’s passport (the original is presented when signing the updated agreement);
- Documents confirming the existence of compelling reasons for restructuring;
- Certificate of income, account statement or other document confirming solvency;
- Extract from work book, a certificate from the employer or a certified copy of the employment contract.
Having collected documents for restructuring, the debtor must fill out an application for receiving services. Banks suggest first making a simplified request.
Let us give an example of a simplified application for restructuring at Sberbank.
You can view and download the application.
To initiate the restructuring procedure, you must correctly fill out and submit an application along with a package of documents. After making a preliminary decision, employees financial institution will be informed about further actions.
At the application review stage, a detailed explanation of the reasons for the deterioration in solvency may be required.
Sample application for loan restructuring indicating the reason for insolvency
You can download a sample application from this link.
Restructuring as a bankruptcy procedure
If the bank refuses to revise the terms of the agreement, the borrower will retain the right to initiate bankruptcy proceedings with subsequent debt restructuring through the court. Cm. the federal law No. 127-FZ “On insolvency (bankruptcy)”.
According to current legislation, debt restructuring in bankruptcy is carried out only after the involvement of a qualified expert - a financial manager. Which is obliged to develop an action plan aimed at restoring solvency and fulfillment of the borrower’s obligations.
Every year this procedure becomes more popular. According to a report published on the Fedresurs website, in 2019 the courts declared about 69 thousand bankrupt. Russian citizens, and in total since 2015 more than 163 thousand. However, at the end of the year, creditors managed to return only 3.5% of debts. Procedures worth ~225.6 billion rubles were initiated, of which only ~8 billion were returned.
Features of debt restructuring through bankruptcy:
The creditor's permission is not required to renegotiate the terms of the problematic contract. It should be understood that new order debt repayment during debt restructuring through bankruptcy proceedings is approved not by the creditor, but by the court. It is the court that changes the repayment period of the debt and establishes new rules for the fulfillment of debt obligations.
In order for the court to consider an application for bankruptcy status, the debtor must have stable income, the amount of which is sufficient to fulfill obligations for 36 months. If the amount is not enough, the financial manager has the right to initiate a procedure for the sale of the bankrupt’s property. Based on these conditions, new debt payment terms will be calculated.
Also, the debtor must not have a criminal record for economic crimes and be declared bankrupt over the past 5 years.
On bank accounts, deposits are seized, but the debtor is guaranteed to receive a portion of his own earnings in the amount living wage and the necessary funds to support dependents.
The financial manager opens a special account, which receives the bankrupt’s wages, money from the sale of his property, etc. Payments are also made from this account legal costs, services of a manager and other specialists, payment of loan debt.
Required information is automatically provided credit holidays for a period of up to four months, during which the debtor is not obliged to make any payments. This makes it possible to restore solvency.
The debtor officially receives protection from the actions of debt collectors. The process of forced debt collection is suspended and bailiffs. Claims received by the bankrupt are considered by the financial manager.
The work of the financial manager is paid. The cost of services starts from 25,000 rubles.
A temporary ban on leaving the country is possible.
Pros and cons of restructuring
The debtor gets the opportunity to improve their financial situation, and the credit institution reduces the risk of bad debts.
Advantages:
- Restoring the borrower's solvency. Proper adjustment of the terms of the contract will reduce the level of payment burden;
- The likelihood of partial or complete write-off of accrued interest and penalties for late returns;
- The procedure for forced debt collection is excluded;
- Maintaining a positive credit history (only if bankruptcy proceedings are not initiated).
Along with the advantages, there are also disadvantages. Before using the service, you should familiarize yourself with the possible risks and difficulties that the debtor may encounter.
Flaws:
- The total overpayment on the loan increases after the initial loan term is extended;
- The likelihood of approval of a restructuring application in the event of low income is reduced;
- Problems with obtaining new loans;
- Lack of an option to refinance (consolidate) several problem debts.
Let's sum it up
The undeniable advantage of restructuring for the borrower is a reduction in the amount of the monthly payment and restoration of solvency. But this procedure leads to a significant overall overpayment on the loan.
Here's a simple example:
You have a loan of 500,000 ₽, repayment period 36 months (3 years), rate 15% per annum. Annuity (fixed) monthly payment in this case it is 17,333 ₽, and the total overpayment on the loan is 123,976 ₽ (that is, in total you will pay 623,976 ₽).
Now we will increase the repayment period to 60 months (5 years) leaving the same amount and annual rate. We receive a payment of 11,895 rubles per month, which is significantly lower, but the total overpayment is already 213,698 rubles. Draw your conclusions!
In addition to the obvious profit for banks, restoring the solvency of the borrower is necessary for this reason. If you explain in simple words, then according to the requirements of the Central Bank of the Russian Federation, banks are required to have a reserve for overdue and impaired loans. This reserve is formed from the bank’s own profits. Thus, the more overdue and impaired loans in loan portfolio bank, the necessary more amount reserve and, accordingly, there are fewer free working capital capable of making a profit.
A borrower who has lost his solvency has the right to seek help from the bank that previously provided the loan. What is loan debt restructuring? This is a set of measures that helps you pay off your obligations on more favorable terms. At the same time, organizations receive their funds back, and their clients get out of difficult financial situations with minimal losses.
Debt restructuring refers to a change in the original terms of the loan agreement. Borrowers, when turning to banks for financial support, undertake to act in accordance with the rules of the signed agreement. The document regulates the provisions on loan repayment, the procedure for paying off debt, the timing and amount of payments, and the possibility of early fulfillment of obligations. Other conditions are also prescribed, such as the amount of interest on loans, the procedure for calculating fines for late and incomplete transfers.
In any case, credit institutions will strive to get their money back. To achieve this, in the event of delays, extreme measures may be taken, such as recourse to arbitration or the involvement of collection services. A complete refusal to pay will only worsen the already unenviable situation of the borrower. The result could be a charge of more than large sums due to accrued penalties, seizure of property and damaged credit reputation, which will certainly play a negative role when trying to borrow money in the future.
If the financial situation of clients worsens, banks, at their request, can offer a number of measures that will improve solvency. Usually we are talking about refinancing and restructuring. In exceptional cases, the borrower can defend his rights in judicial procedure, but only on the condition that the bank itself grossly violated the terms of the agreement.
How is it different from refinancing?
To reduce the financial burden of loan obligations, borrowers often pay attention to restructuring and refinancing procedures. The goals of the stated actions are the same - assistance in repaying debt. However, execution algorithms may differ significantly. Refinancing means taking out a loan in order to repay the previous one on more favorable terms.
As a rule, the advantage is a lower interest rate, which is noticeably reflected in monthly payments and the total amount of debt. Also, an additional loan can be provided for a longer period, which also reduces the amount of payments.
Refinancing can be done as follows: original bank issuing a loan, and in something completely different. Currently, many credit institutions provide similar services. Having assumed responsibility for repaying current debts, they draw up new credit agreements with clients. The restructuring procedure is characterized by the presence of other rules.
The financial burden is reduced under the current contract. The parties revise the original terms, as a result of which the borrower will be able to repay debts with less losses.
Refinancing loans at Alfa-Bank
from 50,000 to 5,000,000 rub.
7 years
from 11.99%
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Consideration:
Refinancing loans in Rosbank
Credit limit:
from 100,000 to 3,000,000 rubles.
5 years
from 11.99%
from 23 to 70 years
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Refinancing loans at UBRD
Credit limit:
from 30,000 to 1,000,000 rub.
7 years
from 13%
from 19 to 75 years old
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Refinancing loans at Interprombank
Credit limit:
from 45,000 to 1,100,000 rubles.
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from 11%
from 21 to 75 years
Consideration:
Refinancing loans in Bank Uralsib
Credit limit:
from 35,000 to 2,000,000 rubles.
7 years
from 11.9%
from 23 to 70 years
Consideration:
When required
Credit institutions are reluctant to agree to the terms of changing contracts with clients. A decrease in interest rates or an increase in the term of debt has a negative impact on profit indicators. However, if there is a real threat of possible non-payments, the organization’s specialists can meet their clients halfway. In some cases, if there are several delays in payments, banks, before resorting to arbitration, often invite clients to reconsider the original terms of the agreement.
- Dismissal
- Official abbreviation wages, including as a result of transfer to another position or to a reduced work schedule
- Changes in family circumstances (birth of a child, moving and other factors)
- Long-term disability of the borrower or his family members
- Changes in exchange rates
- Deterioration of the borrower's financial situation for other reasons
It should be remembered that the use of restructuring is a right, not an obligation of banks. Credit institutions, depending on their internal policies and the client’s circumstances, may refuse to revise the current terms of the agreement. In any case, the presence of an additional agreement or its absence does not in any way affect the obligation to fulfill the terms of the loan. The borrower will also be required to make debt payments in full and on time, which is confirmed by the provisions of Art. 309 and 310 of the Civil Code of the Russian Federation.
Unilateral refusal to further fulfill the terms of the agreement is not permitted. Therefore, you should not violate the payment schedule after filing an application for restructuring. The debtor will need to provide significant evidence to reduce his solvency. Moreover, banks prefer to work and even make some concessions with those clients whose financial discipline is not questioned.
Advantages
Revision of the terms of a loan agreement does not always mean a general reduction in the financial burden of the debtor. Usually we are just talking about increasing the debt period. At the same time, the amount itself does not decrease; moreover, it can be increased.
What is the benefit to the borrower from restructuring? The worsening financial situation makes making monthly payments to a bank account problematic. For borrowers, periodic payments may not be commensurate with their income. Revision of contractual relations towards a longer period allows you to reduce the monthly burden due to the overall increase in debt. As a result, the bank does not lose its profits, but clients get the opportunity to pay off their debts less painfully in material terms.
Among the main advantages of restructuring are the following:
- Possibility of maintaining a positive credit history.
- Consolidation of your own financial efforts by changing the terms of the contract in favor of the payer.
- No penalties for late payments.
- Details of further cooperation are discussed only at the level of interested parties, preventing judicial trial and the involvement of third parties in a conflict situation.
Who can use it and when?
Regardless of the bank’s decision, you should seek help as early as possible, avoiding possible late payments. Chances of getting approved credit organization higher if the borrower’s financial discipline does not raise questions. Revision of the original terms of the contract is permitted in the presence of a number of circumstances. The main criterion is a decrease in solvency. Most often, the financial situation worsens due to:
- job losses
- loss of incapacity due to illness
- changes in marital status
- other options
How to choose a bank
The restructuring procedure can be carried out by the bank where it was originally signed loan agreement. The organization has the right to revise the current conditions at its discretion. It is better to clarify the admissibility of making possible adjustments initially. However, the proposed options do not always meet the requirements of borrowers.
If the restructuring procedure is unprofitable for the payer, it is recommended to pay attention to refinancing services. Currently, most banks agree to take on debentures borrowers on more favorable terms. Some refinancing programs require repayment of several loans at the same time. In some cases, actions are available even with a negative financial reputation.
How to register
Late payments for several months serve as the basis for the bank's close attention to the borrower. A notice is sent to the debtor with an offer to repay the arrears as quickly as possible. Otherwise, collection may be carried out with the involvement of the courts.
In an effort to return their funds, banks have the right to offer clients a number of ways to resolve problems, including a restructuring plan. However, to reduce negative consequences It is recommended to contact credit institutions immediately, avoiding delays. Thus, conscientious clients have an advantage and a chance to review credit provisions increase on favorable terms.
What programs exist
There are several options for resolving a borrower’s financial difficulties with the help of a bank. Restructuring measures include extending the term of the contract, lowering the interest rate, changing the currency of loans, and others. The main ones are discussed below.
Extension of the loan agreement
The most popular debt restructuring measure is the extension of the loan agreement. Increasing the loan term does not reduce the total amount of debt, and even increases this indicator, but the need to transfer a smaller amount each month has a positive effect on the borrower. Typically, the condition for a possible extension is specified initially. Therefore, before contacting the bank, it is recommended to review the provisions of the document again. But even if there is no such clause about changing the payment schedule, it is worth contacting the organization’s employees directly. There is a high probability that in the presence of confirmed unforeseen circumstances that have changed the level of solvency of the borrower, the bank will go towards the client.
The terms of the extension are negotiated after the payer writes a corresponding application and provides supporting documents. Usually the procedure does not take much time. Within a few days, adjustments can be made to the original conditions. In order to avoid future overpayments on the cost of the loan as a result of extending the term of the contract, borrowers in most cases are not prohibited from repaying the debt ahead of schedule after their financial situation has stabilized. This measure will help avoid additional costs in the form of accrued interest.
It is worth considering that the bank is unlikely to agree to restructure debt obligations in the form of prolongation within the framework of one agreement. Therefore, it is worthwhile to take measures on your own to improve your financial situation.
Another type of debt restructuring is the provision of credit holidays. This measure involves introducing some temporary changes to the payment schedule in the form of a deferment. The following options are possible:
- Full deferment. The borrower has the right not to repay the loan for a certain period, usually several months. During this time, no penalties are provided.
- A partial deferment involves paying only part of the payments. Usually we are talking about repaying interest without taking into account the principal debt.
Banks prefer to use the 2nd option, which may not be so profitable for the borrower, especially at the initial stages of repaying obligations, when the amount of interest is quite significant. Credit holidays are considered as additional service jar. You can use it when special circumstances arise in your life, for example, when you are on maternity leave.
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from 24%
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590 rubles
Installment card "Conscience"
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Svoboda Bank Home Credit installment card
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rUBRD credit card 120 days without interest
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300,000 rub.
Grace period:
120 days
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1,900 rubles
Credit card Halva from Sovcombank
Credit limit:
350,000 rub.
Grace period:
1095 days
from 0%
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Consideration:
Service:
0 rubles
Reduction of interest under the agreement
The most successful option for payers is to revise the loan agreement in favor of reducing the interest rate. The benefit for the borrower is obvious, since there is a real relief of the debt burden, which can be quite significant. Reducing the interest rate under the current loan agreement is the most beneficial measure for the payer. This is especially true for long-term agreements. For example, when repaying a mortgage with annuity payments, even a slight relaxation will save a decent amount for the borrower.
As a rule, banks are reluctant to agree to lower interest rates, preferring to restructure loans in other ways. However, the Central Bank of the Russian Federation issued a Letter dated January 30, 2018, the provisions of which allow credit institutions to revise the current rate. Moreover, when drawing up contracts, it is recommended to use a clause on the possibility of revising the cost of the loan if the key rate.
If you wish to take advantage of such measures, the client will have to provide the bank with a number of documents with information about his solvency and current financial condition. However, it is worth remembering that a likely reduction in the interest rate is only a recommended measure; the bank makes the final decision independently, focusing on the internal policy of the institution. There are high chances of approval of the request if banks have similar refinancing programs in their arsenal. In addition, one of the conditions for revising the contract is the financial discipline of the borrower. Delays in payments are undesirable.
Currency replacement
Another way of restructuring is to change the currency of the loan. Relevant in case of exchange rate instability national currency. The devaluation of the ruble in 2014 financially collapsed the solvency of many borrowers who entered into contracts in foreign currency. Banks usually do not benefit from renegotiating such terms. Typically, changes to an existing contract occur under the influence of external factors and largely depends on the decisions of the management of organizations.
Write-off of penalties
Late payments or violation of other terms of the contract lead to penalties. In addition to paying the principal and accrued current interest, the borrower has an additional obligation to repay the penalty. The cost of fines and penalties can be quite high. The penalty is calculated for each day of delay in amounts significantly exceeding the usual accrual of interest. Therefore, if there are no transfers for a long time, the debt can grow significantly.
The reason for untimely non-payments may be not only the banal reluctance to pay and the irresponsibility of the borrower. Force majeure and the occurrence of unfavorable situations also do not allow repaying the debt on time. Restructuring as a write-off of penalties is quite rare. However, if you have valid reasons, you can try to contact the bank for help. If the organization’s specialists consider the arguments presented convincing, then it is likely that the accrual of penalties and fines will be canceled for the borrower.
You only have to pay the principal and interest. Typically, this measure is resorted to in situations in which the borrower was not able to make the next payment, for example, during hospitalization or departure.
Combination of several methods
In difficult situations and difficult financial situations, the restructuring program can combine several methods simultaneously. The agreement between the bank and the client is carried out through a personal conversation and an individual approach. Combining several ways to reduce debt at the same time is not always beneficial for borrowers. The main advantage for them is receiving a deferment without accruing additional penalties. In this case, the period of validity of the loan agreement and the total amount of debt may be increased.
With the help of government support
In some cases, the state allows its active participation in helping borrowers. Similar actions become possible when developing special programs at the federal level. One of these is support for certain categories of borrowers mortgage lending. The Housing Mortgage Lending Agency, created for these purposes, is designed to provide assistance to the population with the repayment of obligations in the amount of up to 600,000 rubles, but not more than 20% of the volume total debt. It is envisaged that the state will assume responsibility for paying part of the debt.
Actions are aimed at special categories of borrowers, which may include persons falling under the following criteria:
- disabled people
- combat veterans
- persons under 35 years of age with children
- parents of disabled children
- employees of municipal institutions, state authorities and local government
Documentation of decreased income may be required. Applications are considered if the income for each family member is less than 2 subsistence minimums.
Participation in the program listed below is free. A number of conditions must be met:
- The collateral housing must be the only one
- Housing should not be characterized as “elite”
- The footage of the apartment is taken into account: for a one-room apartment - up to 45 sq.m., for a two-room apartment - no more than 65 sq.m.; three-room apartment – up to 85 sq. m. If there are 3 or more children, the footage of the home is not taken into account
More details about state support programs can be found by contacting the bank. It is worth considering that the promotions are limited, and refusal may be possible if the selection criteria are not met.
What documents are needed
Initially, clients apply for restructuring. The reasons for revising the terms must be supported by a number of documents, including:
- income certificate
- work book confirming the fact of dismissal
- documents on the incapacity of a citizen
- child's birth certificate
- certificate of family composition
- consent of the spouse to amend the mortgage agreement
- certificate of registration with the employment service
- other documents confirming decreased solvency
Loan restructuring does not always mean more favorable conditions for the borrower. Banks are reluctant to take steps that reduce their profits. Most often, options are considered in which the loan term is extended and, accordingly, the total amount of debt is increased. Thus, despite the decrease in volume monthly payments, the amount of debt obligations increases.
But if the current situation does not allow you to repay the debt on time and in full, it is still recommended to resort to rescue measures, including trying to arrange a restructuring. Subsequently, if your financial situation improves, early payments will help reduce the amount of interest charges.
Video: Application for loan restructuring - legal advice
Loan restructuring is a special measure for borrowers,
who are having difficulty repaying their loans. In the same time
checks interest rate, as well as the amount and timing of payments.
The essence of this procedure is to provide the borrower with certain benefits. The goal is to try to change the difficult situation and restore the ability to make payments.
If a borrower experiences difficulties that make it impossible to continue making regular loan payments, he should not panic. Don't ignore difficulties and don't think that the situation will improve on its own. Unfortunately, such problems cannot be solved without active action. If a borrower avoids communicating with a lender when payment cannot be made, he is behaving completely incorrectly.
The most appropriate solution to these problems would be to contact a bank or lawyer. It is important to describe the situation as honestly as possible. Often the lender will compromise with such behavior of the borrower. As a result, you may receive the proposed restructuring procedure.
In most cases, loan restructuring begins for the following reasons:
- Illnesses or injuries, as well as accidents resulting in disability
- The birth of children, parental leave or divorce, which leads to increased expenses for the borrower;
- Loss of a main source of income, including loss of a job, retirement, business cessation, delay of wages by the employer;
- Changing the terms of loan repayment by the lender;
- If the agreement is executed in foreign currency, this is a sharp change in the exchange rate.
The decision to restructure debt is always made on an individual basis. But in order for the bank to meet the borrower’s requirements, the reasons must be very serious. In addition, documentation may be required to demonstrate the borrower's hardship and current financial situation. But in some cases, restructuring is carried out by banks in order to generate income.
The procedure can be applied not only to individuals, but also to legal entities. Even the state sometimes carries out debt restructuring. Similar to this procedure is on-lending or loan refinancing.
Often, restructuring is carried out after a trial in case of bankruptcy of an individual. In any case, this procedure affects the borrower’s credit history. However, this should not be viewed solely as a negative process. Often this is the only way get out of debt. Restructuring can help restore solvency.
Last update: 03/09/2020
Reading time: 10 min. | Views: 835
Hello, dear readers of the “site”! In this article we will talk about loan restructuring - what it is, what types of loan restructuring there are, how you can restructure loan debt.
After reading the article to the end, you will also learn:
- for what reasons is the loan restructuring carried out;
- who benefits from this procedure - the borrower or the bank;
- what advice do experts give regarding choosing a bank;
- what you need to know before restructuring your loan debt.
At the end of the publication you will find answers to the most popular questions on this topic.
So here we go!
Read about what loan restructuring is and how you can restructure loan debt in our issue
Before you start studying theoretical foundations restructuring, you should understand what is meant by this financial procedure.
Loan restructuring– these are special measures applied to debtors who find it difficult to pay the loan. In the process, the interest rate is revised, as well as the size and timing of payments.
The essence of this procedure consists of providing the borrower with certain benefits. The goal is to try to change the difficult situation and restore the possibility of payments.
If the borrower experiences difficulties that lead to the inability to continue making regular loan payments, he should not panic. You should not ignore difficulties and think that the situation will improve on its own. Unfortunately, such problems cannot be resolved without active action. If a borrower avoids communicating with the lender when it is impossible to make payments, he is behaving absolutely wrong.
The best solution in case of such difficulties is to contact the bank. It is important to describe the current situation as honestly as possible. Very often, when the borrower behaves in this way, the lender meets him halfway. As a result, you may receive an offer to carry out a restructuring procedure.
Most often, loan restructuring is initiated for the following reasons:
- illnesses or injuries, as well as accidents that lead to loss of ability to work;
- the birth of children, parental leave or divorce, which led to an increase in the level of the borrower’s expenses;
- loss of the main source of income, including loss of job, retirement, cessation of business, delays in wages by the employer;
- changes by the lender to the terms of loan repayment;
- if the contract is executed in foreign currency, there will be a strong change in the exchange rate.
The decision to restructure loan debt is always made on an individual basis. But for the bank to meet the borrower halfway, the reasons are mandatory must be very serious. ☝ Moreover, You may need documents that confirm the difficulties, as well as the current financial situation of the borrower. But in some cases, restructuring is carried out by banks in order to generate income.
The procedure can be applied to not only physical, but legal entities. Even states sometimes carry out debt restructuring. Similar to this procedure is on-lending or .
Often, restructuring is carried out after a trial regarding. In any case, this procedure has an effect on. However, you should not treat it solely as a negative process. Often it is the only way to get out of the debt hole. Restructuring can help restore solvency.
2. Who benefits from loan debt restructuring – the bank or the borrower? 💸
Many people try to understand: Is restructuring beneficial for debtors or does it only benefit the creditor (bank). In fact, most often this procedure gives certain advantages both first and second:
- After completing the restructuring, borrowers are given a pause, which allows them to correct financial situation;
- At the same time, the creditor receives payments on overdue debts, which are disadvantageous to him.
A banking organization is interested in minimizing↓ the number of unpaid loans. This is also due to the fact that supervisory authority on financial markets ( Bank of Russia) requires creating reserve for impaired loans, as well as those for which payments are not received.
The creation of such a reserve is carried out from net profit credit organization. Its size is quite large. The less ↓ the overdue debt, the less ↓ amount will have to be spent on creating a reserve. Ultimately, this will lead to an increase in net profit. Therefore, it is more profitable for the bank to restructure the loan than to recognize it as bad.
If we consider the procedure from the debtor's point of view, he can receive serious benefits. However, in practice, restructuring is used quite rarely.
In fact, if the borrower understands that repaying the loan on the same terms is becoming difficult for him, there is no point in waiting for the situation to worsen. It is better to contact the creditor, explain the situation and request a restructuring.
Banks, realizing that the situation is truly difficult, often accommodate their clients halfway. They may change the payment schedule or reduce their size. By the way, in some cases, credit institutions themselves offer their clients the procedure in question. This is due to the desire to optimize cash funds.
To proceed with restructuring, the bank requires the following conditions to be met:
- serious financial difficulties from the borrower, which may become the reason for the procedure;
- the debtor has never allowed any overdue debt to arise in the past;
- the client has not previously used restructuring;
- The borrower's age does not exceed 70 years.
💡 Note: It is much easier to arrange a restructuring with a credit institution for secured loans, For example, subject to collateral.
Taking into account the attitude towards the restructuring procedure, banks can be divided into:
- Loyal banks They often go to the extent of writing off fines and penalties from clients, after which they formalize new loan new contract on more favorable terms. Despite the fact that you will still have to make payments on the loan, this option is the most profitable for the borrower. However It makes sense to ask the bank for confirmation that the previous loan agreement has in fact been terminated. This fact must be documented. To terminate the previous contract, a special agreement is drawn up, which is signed by both the bank and the borrower, or the client is simply issued a certificate.
- Hard cans are more categorical towards the client. Such creditors begin to threaten the debtor with debt collection through the courts and collection agencies, the onset of other serious consequences. Only if the client does not resume payments, he is offered to draw up a new contract. In this case, the loan amount increases by the amount of accrued penalties, fines and interest. Of course, such conditions are not beneficial to borrowers. However, they can be used in situations where when there is simply no other choice.
If the bank refuses to carry out the restructuring procedure or offers not profitable terms, perhaps it makes sense to initiate bankruptcy proceedings.
Main types of loan debt restructuring
3. Types of loan restructuring - 7 main types 💎
There are several types of loan debt restructuring. Most often, the choice of them is determined by agreement between the borrower and the credit institution. Much less often the right to choose is given to the client.
Below are most common types of restructuring , which are used in most credit institutions in Russia.
Type 1. Credit holidays
When applying for a credit holiday, the borrower is allowed not to make loan payments for a certain period of time. The opportunity not to repay the loan may be provided for a period from several months to a year.
The most common reasons for such restructuring are:
- birth of a child;
- loss of job;
- conscription for military service.
Credit holidays are the best option for the borrower. During the absence of the need to make payments, the debtor manages to improve the financial situation. He can get a job and find other sources of income.
Worth considering! For banks, credit holidays turn out to be unprofitable. During this period financial institution receives absolutely no payments. Therefore, this type of restructuring is used extremely rarely.
One of the types of credit holidays involves the absence of payments on the principal debt, subject to monthly interest payments. In this case, you will have to continue paying part of the debt. But in any case, you will be able to get a break and temporarily get rid of claims from the bank.
Type 2. Rate reduction
One type of restructuring is to reduce the interest on the loan. This option is possible for debtors with a clean credit history. Read about it in one of our articles.
When using this type of restructuring amount of overpayment does not change, and sometimes increases. However, the size of monthly payments is reduced, which allows you to cope with financial problems.
Type 3. Write-off of penalties and fines
Some credit institutions write off borrowers as part of a restructuring penalty, which is the total amount of fines and penalties. Sometimes this type involves a deferment for making such payments.
Something to keep in mind : such restructuring can be counted on only in extreme cases. Documentary evidence of serious financial difficulties or a court declaring an individual bankrupt is required.
Type 4. Extension of the loan agreement
Prolongation or renewal of a loan agreement involves increasing the loan term. At the same time, the size of the monthly payment is reduced ↓. 📛 It is important to understand: such restructuring leads to growth overpayments on the loan.
Prolongation may become great opportunity receive a deferment for the end of the loan. In this case, payments are not cancelled. Only the time period increases.
Type 5. Change in loan currency
Before the crisis, many borrowers took out loans in foreign currency. However, in Lately the exchange rate has increased significantly⇑. As a result, it became almost impossible for most debtors to make payments on such loans.
Debt conversion in rubles turns out to be beneficial for borrowers. For the bank this means the loss of part of the profit. That is why the type in question is used extremely rarely.
Type 6. Reducing payment amounts
This option is very similar to prolongation, that is, increasing the term. These two types differ only in the principles of the procedure.
The use of the restructuring under consideration involves automatic increase in loan term. At the same time, the total overpayment also increases . This is explained by the fact that the borrower continues to pay interest on the total amount of debt.
Type 7. Combined
This option involves a combination of elements of several types of restructuring. This procedure is quite complicated and is not formalized in all banks. There needs to be a good reason for using such a restructuring.
Thus, There are various loan restructuring options. They differ in terms of registration and complexity of the procedure.
5 consecutive stages of loan restructuring
4. How to restructure loan debt - step-by-step instructions 📝
Regardless of the type of restructuring, the procedure is carried out according to the same scheme. Experts recommend studying the algorithm in advance to make it easier to navigate the stages.
Step #1. Filling out the form
The form to fill out can be obtained from the bank. In this case, it is not at all necessary to go to the department; you can find the form online on the website. The questionnaire contains information not only about the applicant, but also about the loan for which he wishes to arrange a restructuring.
To evaluate financial opportunities debtor, the bank requires information about the amount of its income, which is confirmed by the relevant certificate, as well as about basic expenses. It would be useful to indicate a list of property that is owned by the borrower.
In the section of the questionnaire that is dedicated to the current loan, you must reflect monthly payment amount, balance of debt. In addition, it is of great importance reason for wanting to restructure. If the procedure is planned to be issued in relation to, additionally You will need to submit documents to the bank for the real estate that serves as collateral.
Some banks allow you to specify how the borrower wishes to carry out the restructuring. Of course, there is no guarantee that the debtor's wishes will be carried out. However, in any case, the credit institution will take them into account.
Step #2. Sending the form to the bank
At this stage, you must submit the completed application form to the credit institution. This can be done not only by visiting the bank office, but also in online mode .
Step #3. Communication with a loan specialist
When the application has been reviewed, the borrower will be invited to the bank branch. Here, in the process of communication with a credit specialist, the current situation is discussed, and the optimal scheme for restructuring is selected.
Step #4. Provision of documents
At this stage, you must provide a package of documents to the bank. Traditionally it includes:
- application for loan restructuring;
- original and copy of identity document;
- a valid loan agreement;
- documentary evidence of the current financial situation.
Step #5. Drawing up a restructuring agreement
If, based on the results of consideration of the application and submitted documents, the bank makes a positive decision regarding the restructuring, a new agreement is drawn up. It details the restructuring scheme that will be used.
Take note: if the original contract involves guarantor or co-borrower, carry out restructuring without their consent it won't work.
Before signing a new loan agreement, the borrower must not only read it carefully, but also make sure that the previous one is closed. Most often, confirmation is either signed agreement, or the corresponding reference.
☝ Besides, When carrying out restructuring, you should not sign an agreement until the debtor is presented with a new payment schedule. It is important to make sure that the borrower can handle the payments.
If a credit institution refuses to carry out restructuring, experts recommend that the debtor request written reasoned confirmation of a negative decision .
In the future, if the bank sues the borrower, having such a document can be very useful. If the court sees a desire to pay off debts in combination with the bank’s lack of desire to meet halfway, it is quite possible that the decision will be to oblige the creditor to carry out a restructuring procedure.
5. How to choose a credit institution for restructuring - expert advice + review of the TOP 3 banks 🏦
Loan restructuring is often used by debtors to pay off an existing loan by taking out a new one. If the loan was received on unfavorable terms, it makes sense to contact the same credit institution to take out a new loan to pay off the existing debt.
When choosing a bank where the restructuring will be carried out, the borrower must take into account a number of criteria:
- reputation of the credit institution;
- the amount of commission charged when drawing up a new contract;
- bank policy regarding restructuring;
- conditions for granting a new loan.
Do it yourself right choice from the huge list of banks operating in Russia, it can be difficult. Therefore, it makes sense to turn to the ratings compiled by experts. Below are 3 popular credit organizations who actively promote the restructuring service.
1) VTB Bank of Moscow
VTB Bank of Moscow
provides a service for restructuring loans, including those issued in other credit institutions. It is enough to submit an application so that the debt load is on family budget decreased significantly.
The bank proposes restructuring civil servants on special conditions.
There are a number of advantages of the bank compared to other similar organizations:
- the borrower can choose the most convenient date for making monthly payments;
- insurance is taken out on a voluntary basis;
- the debtor can count on long credit holidays.
It does not take much time to complete an application for restructuring. After submitting the application and providing the necessary documents, the bank makes a decision within ¼ hours.
2) Sovcombank
Sovcombank
is a unique credit organization that helps citizens who are rejected by all banks. Contacting this company is the easiest, but at the same time quite in a reliable way improve your credit history. Here each client is provided individual restructuring program.
The debtor just needs to fill out an application online on the credit institution’s website. After approval, all you have to do is visit the office of the credit institution. Here, upon presentation of an identity document, you can arrange a restructuring.
Among the advantages of Sovcombank are:
- the possibility of reducing ↓ payments, increasing loan terms;
- preservation of the collateral;
- registration of credit holidays.
3) Interprombank
Interprombank
operates on the market with 1995
of the year. Today, clients are offered a full range of financial services.
When completing a restructuring in the bank in question, you can count on a number of advantages:
- the ability to combine any number of loans issued by any banks;
- the total amount of loans being restructured can reach 1 million rubles;
- the opportunity to reduce↓ the financial burden on the family budget.
To complete the procedure, simply submit an application online and then provide Required documents and sign a restructuring agreement.
To make it easier to compare the banks reviewed, the main features of the restructuring in them are summarized in the table below.
Table: “TOP 3 popular banks for restructuring + terms of service”
| Credit organisation | Possible amount for restructuring | Contract term | Bid | Other Features |
| VTB Bank of Moscow | Before 3 million rubles | From six months to 5 years | Before 15 % annually | You may not make payments during the holiday period |
| Sovcombank | Maximum 3 million rubles | Before 3 years | 12 -14 % per annum | Most loyal to pensioners and older people |
| Interprombank | Before 1 million rubles | From six months to 5 years | 14 % in year | The borrower has the right to cancel commissions and insurance payments |
📎 Read also the article about how, even with a bad credit history without certificates and guarantors.
6. What to consider before restructuring a loan - useful tips and recommendations 📣
Before starting a loan restructuring, the borrower must understand why he is doing it. It is important to realize: will the procedure actually lead to an improvement in the financial situation?.
If the debtor does not understand the financial and legal features restructuring, it may find itself in a situation where it will no longer be possible to service the debt. Ultimately, the situation may lead to litigation. The result will be very unpleasant cooperation with bailiffs, who will be given the right to collect the debt from the borrower.
To avoid serious troubles, you will have to be extremely careful about the procedure. The following points should be carefully analyzed:
- is it possible to write off fines if they are included in the final amount of debt, you can ask to reduce↓ the amount or use a one-time penalty instead of a monthly penalty;
- What type of restructuring is used is of great importance;
- Before signing the contract, you should calculate the total amount of the overpayment.
If there is still time left until the end of the problem loan no more than six months , experts recommend not resorting to restructuring, but looking for other options for repaying debt.
🔔 In fact, it can be difficult for a person without special financial education to understand all the features of restructuring. Often, the conditions that a credit institution presents as the most profitable turn out to be unbearable in practice.
Often banks completely refuse to formalize restructuring. At the same time, they refer to a damaged credit history and other circumstances. In this case, it makes sense to contact specialized organizations that can help you get a loan on the most favorable terms.
7. FAQ: answers to the most popular questions 💬
In the process of studying information about restructuring, people who do not have a financial education have a huge number of questions. To save our readers time, we answer the most popular ones.
Question 1. How is loan restructuring different from refinancing?
Many people believe that restructuring And refinancing are identical procedures. However, this opinion is incorrect. It is important to understand what it is difference between these procedures, and what impact they have on your credit history. Only with full understanding can you expect that the procedure will help improve your financial situation.
Refinancing and restructuring: what's the difference
Refinancing is a financial procedure when one loan is repaid using funds received during the process of obtaining another. In other words, a new loan agreement is opened while the old one is closed.
Refinancing can be issued either at the bank where the current loan was received or at any other credit institution. It is possible to carry out the procedure for several loans at once, even received in different banks. As a result, a large number of loans can be combined into one.
When refinancing, there is no negative impact on the borrower's credit history. The report will show that one loan agreement is opened and another is closed.
Refinancing is a great way to reduce your debt load. Borrowers who have certain financial knowledge and experience constantly analyze changes in the market situation. Bank lending conditions are determined by a large number of factors, including the size Central Bank key rate.
Should be understood: The credit institution from which the current loan was received has the right to refuse the debtor to refinance it. Even if the market situation changes, the bank is not obliged to soften lending conditions.
However, the borrower in such a situation can apply for refinancing to another credit institution. If he has no problems with his credit history and meets the bank’s requirements, an agreement will be drawn up on more favorable terms and the current loan will be repaid with the funds received.
Before proceeding with refinancing, the borrower must carefully analyze all the terms of the agreement. Great importance should be given loan term, interest rate, and monthly payment amount.
✍ Should be considered, that some credit institutions establish commission For refinancing or for a certain period of time, the interest rate is increased. Therefore, before signing the contract, it is important to read it carefully.
No credit institution would want to see citizens with an unfavorable rating among their clients. Therefore, the decision on the application largely depends on the credit history of the debtor.
Unlike refinancing, restructuring is something different.
Restructuring– this is a change in the terms of the current loan agreement. The procedure can be completed at your current bank. It will not be possible to switch to another one.
Most often, restructuring is resorted to when the borrower has serious financial difficulties and can no longer service the debt on the same terms.
The restructuring method is determined individually for each debtor, it can be:
- reduction↓ interest rate;
- reduction↓ of the monthly payment;
- write-off of accrued fines and penalties.
You should always review the terms and conditions carefully. Each bank develops them individually. Restructuring does not always turn out to be beneficial for the client. Often, having agreed to visually favorable terms, the debtor is faced with increase overpayments .
Many people are concerned How does restructuring affect credit history? . It all depends on when an agreement on the procedure is reached. If you managed to do this on time, only the closing of the loan will be visible on your credit history report.
However, in most cases, restructuring is resorted to when the debtor finds itself in a hopeless situation. Most often this happens when the loan is already overdue. In other words, credit rating the debtor at this moment is already decreased ↓. Naturally, this cannot but be reflected in your credit history.
To make it easier to compare the processes of restructuring and refinancing, we have presented the main features in the table below.
Table: “Distinctive features of refinancing and loan restructuring”
| Criterion for comparison | Refinancing | Restructuring |
| The essence of the procedure | Allows you to save money by reducing overpayments and repaying the loan on more favorable terms | The last way to solve debt problems out of court |
| Where is it issued? | In any credit institution | Only where the loan was originally received |
| Who can apply | Citizens with a high-quality credit history | Borrowers even if there are arrears |
| What impact does it have on credit history? | None, in the report it looks like a regular loan | Does not affect if completed on time |
| Additional expenses | Often accompanied by a commission | Most often issued free of charge |
📌 Thus, Refinancing is carried out to make debt repayment more profitable. In contrast, restructuring is used when it is necessary to get out of a debt hole.
Question 2. How many times can a loan be restructured?
At the legislative level, there is no restriction on the number of requests a debtor makes to a credit institution with an application for restructuring. It turns out that for each loan agreement you can count on such a procedure.
However, you should understand: If, after restructuring, the debtor continues to delay without serious grounds, he is unlikely to be able to count on the procedure being carried out again in the future. Most likely, the bank in this service is simply will refuse .
We should not forget that absolutely all information about the loans issued, as well as the quality of their servicing, is reflected in borrower's credit history. detailed information regularly sent by banks to credit bureau .
Lenders use the information contained in your credit report not only when issuing new loans, but also when applying for refinancing or restructuring. Therefore, after completing the procedure in question, it is important to adhere to the new schedule. This will keep your credit history at an acceptable level.
If the borrower has a really difficult situation, but the bank refuses to carry out restructuring, the lender may resort to other measures to repay the debt. Most often used for this purpose:
- requirement to repay the remaining debt in full ahead of schedule;
- transferring the loan for collection to collectors;
- going to court.
Question 3. What is the procedure for restructuring an overdue loan?
When applying for restructuring of an already overdue loan, you should keep in mind: Most banks do not write off fines, penalties and penalties . As a result, the amount of debt under the new agreement increases by the amount of these payments.
In order not to aggravate the situation, before signing a restructuring agreement, you should carefully analyze it. If it turns out that the fines are too high, the best solution will go to court. But such a measure should be resorted to only if the reason for the delay is quite serious. Moreover, the court will require documentary evidence of the existing financial difficulties.
If the situation is really serious, the decision will most likely be made in favor of the borrower. This usually happens when the reasons for the delay are job loss, serious disease , assignment of disability And so on.
Following the trial The bank may be required to increase the loan term and exempt the borrower from penalties. You will only have to pay the principal amount of the debt.
If there are delays, the restructuring procedure will include the following steps:
- filling out an application for restructuring indicating the reasons for the financial difficulties encountered;
- carrying out an analysis of the submitted application by the credit institution, as well as the reasons indicated therein;
- making a decision based on the results of the review;
- bank offer various types restructuring for the borrower to reduce financial burden. To do this, it is necessary for bank employees to make sure that there are objective reasons for the deterioration financial condition debtor;
- referral by the debtor to a credit institution package of documents, which is necessary for carrying out the restructuring procedure;
- preparation by an employee of a credit institution of a restructuring agreement. This agreement reflects the terms of debt repayment;
- careful study of the contract by the borrower. Only after carefully checking it does he sign it.
If the initiator of the restructuring procedure is a bank, even if there is overdue debt, the debtor has the right to agree to the terms offered to him or to refuse them.
To make the right choice, you should calculate amount of overpayment in case of agreement to restructuring. Also it is important to clarify whether the penalty will be included in the total amount of debt.
8. Conclusion + video on the topic 🎥
Loan restructuring is used when the borrower has serious difficulties that prevent high-quality debt servicing. However, before agreeing to the procedure, you should analyze how beneficial it is.
The situation should be studied from two points of view. On the one side, restructuring helps cope with unsustainable financial burdens. On the other side, When the contract is extended, the amount of overpayment increases significantly.
Important things to consider: in some cases, restructuring is the only correct solution. It will help avoid trial. If completed in a timely manner, this procedure allows you to maintain a positive credit history.
And also a video about what it is credit history, how to find out and can it be fixed:
That's all for us.
If, as a result of debt servicing, payments become unsustainable, may you be able to arrange a restructuring on the most favorable terms!
If you have any questions, comments or additions on this topic, write them in the comments below. Don't forget to also share the article on social media. networks with your friends. See you again on the pages of our online magazine!
If the borrower cannot cope with monthly payments, he can negotiate with the bank on restructuring. Many people confuse refinancing and restructuring, but refinancing means opening a new loan. Refinancing is a change in the terms of an existing loan.
Restructuring is a procedure for changing the terms of loan repayment. Debt is restructured if they want to reduce debt payments, and this process may also mean an increase in the loan period. The bank extends the loan over a longer period of time.
Another way to reduce your credit burden is through credit holidays. The organization can exempt the client from payments for several months (usually 3-4). The payment has the right to be reduced to the minimum. Credit holidays, however, also increase the lending period, and the number of payments increases accordingly. There are cases when the interest under the agreement is reduced, the currency of the loan is changed, fines are written off, etc.
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In what cases can you count on restructuring?
In order for the bank to approve a loan restructuring, there must be appropriate grounds, since no one will simply change the terms of the debt.
The borrower can take advantage of restructuring if:
- Lost my job. You will need to attach the relevant certificates.
- A child was born and family expenses increased.
- A relative fell ill.
- Called to serve.
- There was a layoff at work and wages were reduced.
- Lost ability to work.
In this case, you will need to contact the bank with an application to change the terms of the agreement.
Restructuring by debt type
This measure helps to avoid problems that arise when the financial situation deteriorates not only in banking organizations. There are different types of debt restructuring:
1. For loans.
This is a set of measures by a credit institution that is aimed at reducing the client’s credit burden. If the borrower’s situation has changed and he cannot repay the debt on time, then he can take a credit holiday, increase the loan term, etc.
2. For housing and communal services debts.
If these are debts for housing and communal services, then the collector will be Management Company. Thanks to restructuring, new payment terms, payment amounts, as well as measures in case of non-payment of debt can be established. The management company may not agree to restructuring, but in most cases a positive decision is made.
3. On taxes.
The tax office provides installments for up to five years. At the same time, you can get a deferment in payment for either one tax or several. Tax restructuring is provided when there are grounds, for example, bankruptcy of an individual. The application is submitted to the authorized body.
Types of restructuring
There are several restructuring programs:
- Credit holidays – debt payment is postponed for a period of one month to 2 years. During this period, the borrower must pay only interest. After the holidays, you need to pay more, since the amount of the overpayment increases for the entire loan period. Deferment is a great option for those who have lost their jobs.
- Extension or increase in loan term. In this case, monthly payments will be reduced. If penalties were applied, they are distributed by month. The extension period should not exceed the maximum for the bank.
- Currency changes are typically used during devaluations. For a credit institution, changing a loan taken in dollars or euros to rubles is not profitable. Typically, currency replacement is a consequence of a decision by bank management under the influence of external political factors. It is also difficult for some clients to cover their debts due to the rising dollar. Converting to rubles will increase the rate, however, this option will be beneficial to the borrower.
- Reduced monthly payment. In order to reduce the payment, the loan itself under the agreement is extended, but the amount of the overpayment will be increased.
- Write-off of penalties. You can receive forgiveness from fines and penalties only if the client provides good reasons for deferment, for example, a court decision declaring the borrower bankrupt. Credit institution in in this case believes that it is realistic to repay the loan without penalties. As a rule, installments are issued for a fine.
How to do a restructuring
The borrower submits an application, which must be accompanied by the following documents:
Credit institutions may require you to provide other documents. It is worth understanding that the bank is not obliged to restructure the debt. The documents may be reviewed, but may seem unconvincing.
You must submit your application before it is overdue. Credit institutions are more willing to negotiate with such a borrower.
The main condition is that the bank must be sure that the client needs help and this measure is necessary to pay off the debt. Otherwise, credit institutions will only waste time, even though they will make a profit by increasing interest or credit holidays.
How many times can you restructure a loan?
The legislation does not limit the quantity in any way, so this issue must be clarified with the lender. Theoretically, if the client and the bank are ready to restructure the loan, then they can be issued in unlimited quantities.
How does restructuring affect credit history?
Not if the bank changes the terms of the agreement before the delay occurs. Any problems with payment will not be sent to the bureau credit conditions. If the client is late in repaying the debt, the credit history deteriorates.
Benefits of restructuring:
The main advantage of restructuring is that, as a rule, it is performed free of charge. Costs may be incurred if it is necessary to sign an additional agreement to the notarized pledge agreement. This measure will help the lender get out of a difficult situation. If the bank refuses to restructure, then you can provide a copy of the application to the court.
Most people have probably heard about refinancing, but not everyone understands exactly what loan refinancing is and how to apply for it, which banks provide such services and which credit institution offers them Better conditions. We will answer all these questions and help you make a choice.
