Using credit as a tool is part of business financing. But with access to credit comes debt, and sometimes, we know that debt can snowball until it’s larger than you can handle. A company’s profitability will ebb and flow, but what do you do when your debt load grows larger than you can manage anymore? Corporate debt restructuring is a strategy that can be brought into play in this situation.

Think of corporate debt restructuring as the reorganization of a company’s outstanding balances. It’s a proactive stance a business can take to stop the fall down the slippery slope towards total bankruptcy. Often, it’s a step that companies take instead of filing chapter 11 bankruptcy.

To explain the process simply, debt restructuring is usually done one of two ways. The first is by seeking lower interest rates. The creditors are sought out and an inquiry is made to have rates lowered. If a large amount is owed, even just a small percentage could make a huge difference. The second is for a business to stretch their obligations out over a longer period of time. More interest will be paid at the end of the day, but it does provide a short-term solution in lowering monthly expenses.

A plan will be drawn up on the part of the business outlining their terms. It is then presented to the creditors, who may or may not agree. If they decline, the matter is brought to court, and if the court sees the plan as fair, the creditors may have to accept the terms regardless.

Wading through the burden of overwhelming debt seems impossible. Having the right team in your corner is what can make all the difference in the world.