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What is a forbearance agreement?

Dealing with litigation can be a real headache. Business owners in Georgia like yourself may therefore be advised to consider a forbearance agreement to help you out with potential problem debtors.

In short, the Legal Dictionary states that forbearance is the agreement between the borrower and lender of any deal, and that this agreement delays foreclosure. In essence, this gives the borrower some additional time to make their payments. It also saves them from having to deal with the negative effects of foreclosing, bankruptcy, and so on.

You and the borrower will draft out an agreement called a workout agreement. In this, you will essentially decide on a new payment plan for them. This can include changing the payment schedule around in a way that suits the borrower more realistically. In exchange, you will agree to refrain from taking legal action against them for being unable to meet the old terms of payment. However, this will only last as long as they are able to keep up with the terms of the new workout agreement.

In the case of the borrower breaking any terms of a new agreement, you will be able to legally pursue them for damages. You will have rights to their payments, as well as to any collateral that was decided upon.

This is just one option that you could potentially pursue when drafting ways to protect your assets while partnering with someone else. In the end, you need to survey your own situation to determine how suitable it really is.

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