Troubled debt restructuring is a process where a borrower and lender agree to modify the terms of an existing loan due to financial difficulty on the part of the borrower. This typically involves renegotiating the terms of the loan, such as the interest rate, repayment schedule, or total amount owed, to make the payments more manageable for the borrower. Troubled debt restructuring is typically used in situations where the borrower is at risk of defaulting on the loan or declaring bankruptcy. By restructuring the loan, the borrower can avoid default and continue making payments, while the lender can recover a portion of the outstanding debt.
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