What is Debt Advisory and Restructuring?

Are you looking to get out of debt? Or maybe you’re considering restructuring your debt in order to manage it more effectively? If so, then you need to know about debt advisory and restructuring.

In this blog, we’ll discuss what debt advisory and restructuring is and how it can help you with your debt. We’ll cover topics such as the types of services offered, and the benefits of using a debt advisor.

By the end of this post, you’ll have a better understanding of how debt advisory and restructuring can be a powerful tool for managing your debt.

Defining Debt Advisory and Restructuring

Debt advisory and restructuring is a service offered by financial professionals to help individuals or businesses that are having difficulty managing their debts.

It is also known as debt relief, debt negotiation or debt counseling. Debt advisors provide a range of services to help borrowers achieve their financial goals, such as reducing debt, consolidating payments and negotiating with creditors.

The goal of debt advisory and restructuring is to find an appropriate solution for the borrower’s current financial situation. This could include negotiating with creditors for lower interest rates, longer repayment terms, debt consolidation, debt settlement or other strategies.

By working with an experienced debt advisor, borrowers can gain insight into their options and develop a plan to reach their financial goals.

The Services Offered by Debt Advisors

Debt advisors provide a range of services to their clients, helping them to manage and restructure their debt in an effective manner.

The most common services offered by debt advisors are:

  1. Financial Planning: A debt management company can assist you in setting up a budget and creating a financial plan that will enable you to better manage your debt. This can include advice on how to reduce your spending and increase your income.

 

  1. Debt Consolidation: This is when a debt advisor combines multiple debts into one single loan with one monthly payment. The advisor can help you find the best terms for your loan so that it works best for your situation.

 

  1. Bankruptcy Advice: If your debt has become unmanageable, a debt advisor can provide advice on whether bankruptcy is the right option for you. They will guide you through the process of filing for bankruptcy and explain the consequences so that you can make an informed decision about whether or not it is the right choice for you.

The Benefits of Debt Advisory and Restructuring

Debt advisory and restructuring services can help individuals and businesses in numerous ways. Here are some of the most common benefits associated with using these services:

  1. Access to Professional Expertise: Working with a debt management company gives you access to professional advice and guidance on how to best manage and reduce your debt. Debt advisors have the experience and knowledge to help you develop a plan that fits your budget and enables you to pay off debt in a timely manner.

 

  1. Lower Interest Rates: A debt advisor can negotiate with creditors to lower the interest rate on outstanding debts. This can help you save money over time and make it easier for you to pay down debt.

 

  1. Improved Credit Score: Debt restructuring can also help improve your credit score by reducing the amount of debt you owe and making payments on time. This can make it easier for you to obtain credit in the future and get better rates on loans.

Should I Choose Debt Consolidation or Debt Restructuring? Which Is Better?

Personal debt is a serious problem in the UAE. When ignored or not handled properly, the condition becomes even worse. According to CEIC Data, UAE household debt reached 446.5 USD billion in August 2022. When dealing with multiple loans and debt, you might feel hopeless and think that there might not be a way out for you. Fortunately, you can make things a bit easier for you by seeking debt advisory and restructuring services in the UAE. Debt advisors know how to help you manage your expenses and clear your debt and loan payments.

How to Solve Excess Debt Problem?

Most people find themselves trapped with credit card debt, which grows very quickly because of high-interest rates and penalties that banks charge on borrowers. In addition to credit card debt, a home mortgage is another major component of debt for many people. When you have debt that you cannot manage, there are generally two ways to bounce back: debt consolidation and debt restructuring.

While both debt consolidation and debt restructuring may share some similarities that can help consumers handle their debt, they are entirely different kinds of debt management relief processes.

How Are Debt Consolidation and Debt Restructuring Different?

  • Debt Consolidation

Debt consolidation is a debt relief process that allows a borrower to refinance or convert multiple smaller debts with higher interest rates into one single loan. Paying for one single loan instead of several loans makes it easier for borrowers to pay off their loans in a short amount of time.

If the single loan has lower interest rates, the monthly payment also becomes smaller than before. This also means the money that was previously used to pay the interest payment of multiple loans can now be used towards the loan principal.

  • Debt Restructuring

Debt restructuring is the arrangement in which the loan provider and the borrower agree on an amount that the borrower can pay back. The borrower, also called the debtor, gets assistance from a credit counselor to speak with the loan provider, also called the creditor, in an attempt to get out of the debt owed.

In such a case, the debt counselor works to negotiate with the creditor and tries to come up with an arrangement where the debtor has to pay only partial debt instead of the full debt amount. If it is done right and handled properly, this can be successful. Just make sure that you get in touch with experienced professionals who specialize in debt advisory and restructuring.

The main difference between debt consolidation and debt restructuring is that:

  • Debt consolidation requires a new loan contract and a new loan application
  • Debt restructuring retains the existing contract but involves negotiation.

While a borrower who applies for debt consolidation doesn’t need to be struggling financially to pay off the debt, a borrower can apply for debt restructuring only if he/she is in financial hardship. While debt consolidation may not degrade your credit score, debt restructuring can.

In other words, while both debt consolidation and debt restructuring are designed to provide debt relief and make the debt more manageable, both have different processes and terms and conditions.

If you are also struggling with debt, contact us for debt advisory and restructuring now.

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