Personal FinanceJuly 02, 2025
Reading time5 mins read

What is Credit Restructuring? Application Requirements and Process

What is Credit Restructuring? Application Requirements and Process

If you’re having difficulty with your credit payments, the solution may lie in credit restructuring. With this method, debts are restructured with more favorable terms, such as extended maturity and reduced interest rates. In this article, you can find out what credit restructuring is, who can benefit from it, the application process, and the key points to consider.

What is credit restructuring?

Credit restructuring refers to the rearrangement of a debtor’s existing loan under more favorable conditions. During the credit restructuring process, the maturity can be extended, interest rates can be reduced, or installment amounts can be redefined. Restructuring is undertaken to make the debt more manageable in the event of repayment difficulties.

Who can benefit from it?

•    Individuals and businesses experiencing financial difficulties: Restructuring offers a solution, especially for those struggling to pay credit cards or personal loans.
•    Those with overdue debts: Individuals with personal loans that are overdue by at least 30 days or credit card users who cannot even pay the minimum due may become eligible to apply for restructuring.
•    Those seeking to prevent a credit score drop: If restructuring is done before falling into default, credit scores can be protected from damage.
•    Those within the scope of BDDK regulations: The Banking Regulation and Supervision Agency (BDDK) has allowed maturity up to 60 months at a 3.11% interest rate for credit cards and personal loans starting from November 1, 2024. This regulation enables millions of users facing financial difficulty to benefit from favorable terms.

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What are the types of restructuring?

Credit restructuring is divided into personal and commercial categories. Although the purpose of both types is similar, the types of debts they cover, application requirements, and implementation processes differ from one another.

Personal credit restructuring

Personal credit restructuring refers to the process by which individuals renegotiate their personal loans, auto loans, mortgages, credit card debts, or overdrafts with banks to obtain more favorable terms, including better maturity, interest rates, and installment terms. This process, aimed at easing financial burden, preventing default, and protecting credit scores, involves paying off the current debt and receiving a new loan under revised terms. By extending the maturity, monthly payments can be lowered and interest rates reduced. Those who want to benefit from credit restructuring must apply to the bank. After the application, the bank evaluates the debt and the individual’s financial situation to create a new payment plan. If the plan is approved, the restructuring is implemented.

Commercial credit restructuring

Commercial credit restructuring refers to the process where tradespeople, SMEs, or large enterprises renegotiate their commercial loans. This is implemented when the debtor is having payment difficulties. Aimed at maintaining the company’s operations, supporting employment, and ensuring financial sustainability, this process offers flexibility, including extended maturity, reduction, or cancellation of principal, interest, and late payment penalties. Additional credit opportunities are also possible, and the process can be applied to firms with total debts above or below 25 million TRY. A third-party audit report or creditor approval may also be required. Businesses facing temporary payment issues, producing value, and not on the brink of bankruptcy, but showing the ability to make payments, may be considered eligible for credit restructuring.

It’s essential to thoroughly analyze your financial situation before taking out a loan. That way, you can repay your credit comfortably without needing to restructure it later. On Papel Blog, we’ve covered everything you need to know about what to consider when applying for a mortgage or consumer loan. You can find answers to your questions in our articles.

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Application process and required documents

The credit restructuring application begins with the debtor contacting the bank directly. This communication is typically conducted via internet banking, mobile app, call center, or bank branches. After the application, the bank evaluates the borrower’s current loan amount and payment history through a financial analysis. At this stage, documents such as an ID, proof of residence, and income (e.g., payslip) are required. For self-employed individuals, a tax certificate or bank statements must be submitted as proof of self-employment. Using these documents, the bank assesses the borrower’s payment capacity and offers a new maturity, interest, and installment plan. Once the restructuring plan is accepted, a written or digital agreement is signed between the parties, and the new repayment plan is implemented.

The credit score plays a crucial role in both the approval and progress of this process. Individuals with a high credit score are more likely to have their restructuring application approved, while those with low credit scores may face stricter terms or rejection. Restructuring does not directly lower the credit score; however, if there are past delinquencies or future payment issues after restructuring, this can negatively impact the score. On the other hand, if monthly payments are made regularly after restructuring, the credit score can improve over time and even increase.

Advantages and risks of credit restructuring

Credit restructuring has both advantages and risks. These can be listed as follows:

Advantages of credit restructuring

•    Reduction in interest and installments: Since the debt is restructured, high interest rates on current loans can be reduced, or monthly installments can be decreased by extending the maturity. This makes the repayment plan more manageable and reduces the total interest burden.
•    Debt consolidation: If you have multiple debts, they can be combined under one structure, making repayment tracking easier and preventing confusion.

Risks of credit restructuring

•    Possibility of increased total interest cost: Even if monthly payments decrease in restructuring, the total repayment amount may increase due to extended maturity. In other words, although restructuring may offer short-term relief, it may ultimately result in higher long-term costs.
• Additional fees: During the restructuring process, additional expenses such as filing fees, loan allocation fees, or attorney fees may arise, which can increase the total debt.
•    Impact on credit score: Restructuring applications and records of delinquency can lead to a drop in your credit score, as the loan appears in the system as a “restructured credit.” However, if you continue to make regular payments after the process, your score can recover and improve over time.

 

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This blog post contains general information, not legal, financial, or investment advice. The content is prepared for informational purposes only, and you are advised to seek professional advice for your specific circumstances. The expressions in this article do not carry any binding nature or responsibility and reflect only the author’s evaluation. All your decisions are your responsibility, and Papel Electronic Money and Payment Services Inc. accepts no liability for any consequences arising from them.