What Exactly Are Forbearance Agreements?
It happens from time to time that even good credit risks have trouble repaying their debts. Serious illness, unemployment, a family emergency-each, when it occurs with a disquieting lack of notice, can wipe out savings and take a toll in other ways, as well. The agreement that goes a long way toward settling this unsettling situation is called a forbearance agreement. In this written contract, a lender agrees to abstain-that is, forbear-from taking action against a borrower that the lender would normally have the right to take. In other words, the lender agrees not to sue or foreclose on the borrower, permitting the latter more time in which to repay the debt. The forbearance agreement is a formalized way of recognizing that there is a problem in the financial relationship and attempting to solve it. It contains a payment schedule created by both parties, which the borrower agrees to adhere to for the duration of the agreement. There is an implicit understanding in this recognition, ho
