Forbearance
Forbearance is a financial term that refers to the temporary suspension of payments on a loan or debt. It is a form of relief that is offered to borrowers who are unable to make their payments due to financial hardship. When a borrower is granted forbearance, they are given a period of time in which they do not have to make payments on their loan or debt. During this period, the borrower is not responsible for any interest or late fees that may accrue. The lender may also agree to reduce or suspend the borrower’s payments for a period of time.
History of Forbearance
The concept of forbearance has been around for centuries. In the United States, the practice of forbearance was first used in the early 1800s. At that time, it was used to help farmers who were struggling to make their payments due to poor crop yields. Over time, the practice of forbearance has been used to help borrowers in a variety of situations, including those who are facing financial hardship due to job loss, medical bills, or other unexpected expenses.
Comparison Table
| Forbearance | Loan Modification |
|---|---|
| Temporary suspension of payments | Permanent change to loan terms |
| No interest or late fees accrue | Interest and late fees may still accrue |
| Payments may be reduced or suspended | Payments may be reduced or extended |
Summary
Forbearance is a financial term that refers to the temporary suspension of payments on a loan or debt. It is a form of relief that is offered to borrowers who are unable to make their payments due to financial hardship. When a borrower is granted forbearance, they are given a period of time in which they do not have to make payments on their loan or debt. For more information about forbearance, you can visit the websites of the Consumer Financial Protection Bureau, the Federal Reserve, or the Department of Education.
See Also
- Loan Modification
- Debt Consolidation
- Debt Relief
- Deferment
- Repayment Plan
- Debt Forgiveness
- Debt Settlement
- Credit Counseling
- Bankruptcy
- Foreclosure
