Debt Management Strategies

Introduction

• Importance of addressing debt issues proactively.

Initial Steps to Handle Debt

• Reduce Expenses
  • Cut unnecessary spending.
• Increase Income
  • Sell unused items.
  • Consider getting an additional job.

When to Seek Restructuring

• If expenses are minimized and income is maximized but debt issues persist, consider restructuring.

Concept of Restructuring

• Analogy of a Family in a Large House
  • Large house with two wings; family can't afford maintenance.
  • They close off the wings to manage expenses better by consolidating living space.

How Bank Restructuring Works

• Bank's Role in Restructuring
  • Approach the bank to discuss financial difficulties.
  • Options available may include:
    • Consolidating loans.
    • Reducing loan interest rates.
    • Extending loan maturity dates.
    • Potentially reducing principal amounts owed.
• Common Practice
  • Both consumers and corporations regularly engage in restructuring.

Conclusion

• Banks have an interest in helping borrowers avoid default.
• Encouragement to approach banks for help if struggling financially.