What is the best way to repair a debt?

When a debt of a bank or company suffers a cessation of payments by the debtor, a viable option is to consider repairing said debt. However, one must be aware of the pros and cons of this decision so as not to end up in a bigger problem. So what is the best way to repair a debt?


What is the best way to repair a debt?

repair a debt?

Repairing a debt means renegotiating the original payment conditions , which results in this debt being eliminated and a completely new one arises, with new payment installments, interest rates and conditions. This process is carried out voluntarily or by obligation when the debtor cannot continue paying under the original conditions of the debt.

It can be said that the best way to repair a debt is that which is done voluntarily, outside a trial, as a mutual agreement between the company and the debtor. This is because the second way of repairing a debt, that is, forced by a lawsuit, is usually much more damaging and entails more expenses on the part of the debtor.


Ways to repay a debt

repay debt

  • Repairing an out-of-court debt: This is what normally happens, when the debtor has not received any notice that requires it in a lawsuit on demand. The debtor and the creditor present themselves, and it is proposed to renegotiate the conditions of payment of the debt that has not been paid. This debt is eliminated so that the debtor will no longer bear the consequences of a significant backlog, for example, paying with his estate, and the creditor should not worry about the imbalances caused to his financial report.

Then, a new debt is established with longer terms and lower installments, which allows the debtor to fulfill his credit responsibility. However, if the creditor becomes required to hire a collection company to assist him, the debtor must pay the additional expenses generated by the service, this is legitimate because its delay is the main reason for such expenses.

  • Repairing a debt judicially: This reparation is preferable to avoid it and it happens when the debtor is in a state of delinquent and has received a notice of demand for delinquency from the creditor. In this trial, the lender collects the debt by force, whether in money, material goods, equity, etc., that is when the option arises to repay the debt, in order to end the trial, with an agreement where the The creditor receives a partial payment of the debt, plus the certified commitment by the debtor to pay the remaining debt, in new installments with new interests based on the amount of the original debt. This usually solves the creditor’s problem, but does not represent good news for the debtor.


Benefits and disadvantages of repairing a debt

Benefits and disadvantages of repairing a debt

Here are the benefits and disadvantages of repairing a debt:

  • Benefits: The main advantage of a repair that is done voluntarily and that is done exclusively under a mutual agreement and with benefits for both parties. When the debt disappears, the delinquency penalties and the pressures of the collection agencies also disappear. In addition to allowing payments under the current capacity of the debtor. On the part of the creditor, he will not see his finances damaged by the backlog of the debt, nor will he have to spend time and resources to carry out a judicial process.

  • Disadvantages: If, as a debtor, there is no awareness of the true ability to pay the credit and it ends up in arrears again, or the interests requested by the creditor and the final amount of the installment have not been properly reported, it may result in a new debt 3 times greater than the original amount.


In conclusion, the best way to repay a debt is to make the agreement for the benefit of both parties, voluntarily and with full awareness of the debtor’s ability to meet the new conditions. This avoids being sued and that in the end the process of repairing the debt comes out more expensive than catching up on its own.

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