Debt Adjustment: How it Works

Debt adjustment

An important thing to understand is that any agreement or payment plan must go through the court system. This is not a punishment, but rather a safeguard that keeps both the lender and the borrower accountable under the supervision of the law. Once a company finds itself in too much debt to pay back the amount in full, a debt adjustment plan can be put in place to allow the company to recover over a longer period of time.


First, you need to find a company or client and see if they are willing to work with you and loan money in order to start paying off your debt. This will involve getting together your legal team and theirs to look at your financial situation; you will consolidate all of your debt in order to get a better understanding of how much debt you are in and whether one creditor will be able to help you.

Next, once you have found a lender or lenders who are going to provide you with money to pay off your debt, you need to draw up a contract with the lenders. This contract will lay out how long of a payment plan you will enter, how frequently you will make payments, how much each payment will be, and the amount of interest that you will pay in exchange for the loan. Most payment plans are generally done over the course of three to five years, but each situation is different, and every lender has a different timeline that they expect to be paid back over. Another variable that you will have to carefully work with the lender on is the amount they expect for each payment; this number will likely depend on your total debt and your projected income. One quick tip: be prepared to pay the lender back at a high interest and know that this is going to be an unavoidable cost of a debt adjustment.
Once you have settled the legal side of a debt adjustment plan, now you have to work on finding the money to pay your lender back. While in a contractual debt adjustment plan, you cannot charge your current clients more or enter into a new contract. The reason you are in debt in the first place is that something is not working within your business model, so even if you were allowed to find a new client it would not necessarily solve any of your problems. Consider this period as a time-out to really work on your company and understanding why you ended up in so much debt.

The first thing to do is take a look at all of your current clients and your relationships with them. At this point, any debt you owed them has been covered so you can work with them. Find out if they have any needs that you have not been meeting. Feedback from your current clients is your best tool for doing better in the future. Also interview your managers, employees, and any recruits that you keep in your pool. It may seem a bit silly to ask low-level employees about the way your business functions, but every level of employee has a different experience that they can share with you. They might have worked at other staffing and recruiting agencies and can give you feedback on how you compare; they might have insight that clients shared with them but not with upper management, or they can tell you what you have been doing right. Any advice or feedback should be taken seriously and looked at by upper management. Restructuring a company and taking criticism can be difficult, but you have been handed a lifeline with a debt adjustment plan and you should not take advantage of that.

Debt adjustment is a useful way for a company to avoid bankruptcy or foreclosure by reaching out to someone else to extend them a loan that they will use to pay off their debt. Then the company will begin a payment plan to reimburse and pay interest on their loan. Take advantage of this kind of plan to save your business and then move forward with the intent to do better for both your clients and your own employees.