Thursday, September 13, 2007

What Is the Meaning of Debt Restructuring?

Debt restructuring allows individuals and companies to change the terms under which they repay financial obligations such as credit card bills and loans, according to both the Federal Trade Commission and the book "How to File for Chapter 7 Bankruptcy."

Individual Types

    You can file for Chapter 13 bankruptcy to get a court-supervised debt restructuring plan, or you can sign up for a debt-management plan through a credit counseling agency, according to the FTC and "How to File for Chapter 7 Bankruptcy."

Individual Benefits

    In Chapter 13, you repay a portion of your debts over three to five years, under court supervision. In a debt-management plan, a credit counselor renegotiates your debts so you make smaller payments over a determined period.

Corporate Features

    A corporation can apply for debt restructuring by filing for Chapter 11 bankruptcy protection, according to the U.S. Bankruptcy Court. Chapter 11 allows overburdened businesses to repay part of their financial obligations while retaining their corporate structures and assets.

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