Debt restructuring

Imagine you borrowed some toys from your friends and then couldn't give them back. You owe your friends their toys but you don't have enough toys to give them all back at once. You can't just forget about the toys you owe because your friends will be sad and you might get in trouble. So, you decide to talk to your friends and find a way to give them their toys back in a way that will make everyone happy.

This is what we call debt restructuring. It's a way for people or companies who have borrowed money (like you borrowing toys) to make a new plan to pay back the money they owe in a way that's easier for them and the lender (like your friends).

Debt restructuring usually involves negotiating with the lenders to change the terms of the loan, such as extending the repayment period or decreasing interest rates. This makes the monthly payments smaller and more manageable, which makes it easier for the borrower (you) to pay back what they owe.

In the end, debt restructuring helps both the borrower and the lender. The borrower gets a break on more manageable payments and the lender can still get their money back (or their toys).