Loan Workouts

A loan workout is an agreement between a borrower and lender to address difficulties in repaying a loan. Instead of defaulting or foreclosing, they collaborate to modify the original loan terms—such as reducing payments, extending the repayment period, or restructuring the debt—to help the borrower regain financial stability. The goal is to avoid foreclosure or bankruptcy, allowing the borrower to continue their financial obligations and the lender to recover as much as possible. Loan workouts are common in situations where borrowers face temporary hardships but have the potential to meet adjusted payment plans.