Calculator Inputs
Example Data Table
| Scenario | Current Balance | Current APR | Current Term | New APR | New Term | Haircut | Fees | New Payment | Lifetime Savings |
|---|---|---|---|---|---|---|---|---|---|
| Illustrative restructure | $18,000.00 | 16.50% | 36 months | 8.25% | 48 months | 6.00% | $700.00 | $457.23 | $2,401.01 |
Formula Used
1. Current payment formula
Payment = P × r ÷ (1 − (1 + r)−n)
P is current balance, r is monthly interest rate, and n is remaining months.
2. Restructured starting balance
New Balance = Current Balance − Principal Reduction + Financed Fees
3. New payment formula
New Payment = New Balance × r ÷ (1 − (1 + r)−n)
4. Monthly savings
Monthly Savings = Current Monthly Payment − New Monthly Payment
5. Lifetime savings
Lifetime Savings = Current Total Outlay − New Total Outlay
6. Debt-to-income ratio
DTI = (Debt Payments ÷ Gross Monthly Income) × 100
7. Fee break-even
Break-even Months = Fees ÷ Monthly Savings
8. Net present value of savings
NPV discounts monthly payment differences using the selected annual discount rate.
How to Use This Calculator
- Enter the current loan or card balance, APR, and months left.
- Enter the proposed restructured APR and the new repayment term.
- Add any principal haircut percentage offered by the creditor.
- Enter restructuring fees and choose whether they are financed.
- Include extra monthly payments to test faster payoff scenarios.
- Add income and other debt payments to measure DTI change.
- Set a target payment if you want an affordability check.
- Submit the form to see payments, savings, schedules, and the balance graph.
Frequently Asked Questions
1. What does debt restructuring usually change?
It can change interest rate, repayment term, payment size, principal balance, fee structure, or a combination of these items.
2. Why can a lower payment still cost more overall?
Lower payments often come from extending the term. Extra months can add interest even when the rate falls.
3. What is principal reduction in this calculator?
It is a negotiated cut to the starting balance. The calculator removes that share before building the new repayment plan.
4. Should fees be financed or paid upfront?
Financing fees lowers immediate cash pressure but increases the amount repaid over time. Paying upfront can improve lifetime savings.
5. What does break-even on fees mean?
It estimates how long monthly payment relief takes to recover the restructuring cost. Faster break-even usually means better short-run value.
6. Why include debt-to-income ratio?
DTI shows how much income is already committed to debt. It helps test whether the new plan improves affordability.
7. What does the NPV result tell me?
NPV values future payment differences in today’s money. A positive figure means the new plan is stronger after discounting timing.
8. Is this calculator a legal or financial recommendation?
No. It is a planning tool for comparing scenarios. Final decisions should consider creditor terms, taxes, and professional advice.