Troubled Debt Restructuring
Financial Institutions
September 01, 2010
by
Lee Christensen, CPA
Many financial institutions are finding it necessary to modify loan terms for the benefit of customers who are unable to make payments according to the original loan terms. These are commonly referred to as troubled debt restructurings (TDRs). A TDR occurs when a creditor, for economic or legal reasons related to the debtor's financial difficulties, grants a concession to the debtor that it would not otherwise consider. For creditors, TDRs include certain modifications to terms of loans and receipt of assets from debtors in partial or full satisfaction of loans.
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