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Other Names: Loan Forbearance Agreement
Forbearance Agreement document preview

What is a Forbearance Agreement?

Unlike a loan modification, which is a more permanent solution to unaffordable monthly payments, a Forbearance Agreement provides short-term relief for borrowers. During the forbearance period, the lender agrees to refrain from taking any action designed to demand or collect payment. The forbearance is usually a short period of time. Typically, it is no longer than a year. 
Making a Forbearance Agreement can help borrowers and lenders avoid conflicts by outlining clear expectations and guidelines/deadlines for the suspension of payments. This agreement will detail the parties involved, the forbearance period, and the loan principal and APR.

When to use a Forbearance Agreement:

  • You are a lender whose borrower can't make loan payments.
  • You have been asked by a borrower for a forbearance.
  • You want to set out the terms of the forbearance period.

Sample Forbearance Agreement

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This forbearance agreement, created on , is entered into by and between ("the Lender"), of , , and ("the Borrower"), of , , .


WHEREAS, the Borrower has previously entered into a loan agreement with the Lender, with a principal amount of and an annual interest rate of %,


WHEREAS, the Borrower has requested that the Lender forbear from exercising any of its rights and remedies under the existing loan agreement,


WHEREAS, the Borrower has failed to adhere to the agreed schedule for repaying said loan, and as a result has defaulted on the loan agreement's terms,


WHEREAS, the Lender has agreed not to demand immediate payment of the total loan balance in accordance with the existing loan agreement, and has instead opted to grant the Borrower an extended opportunity to bring the loan's balance current,


THEREFORE, the Borrower and Lender agree to the following terms of this forbearance agreement:


. Forbearance

Although the Lender is under no obligation to do so, the Lender has agreed to modify the loan in the following way:


The Lender has agreed to extend the due date of the past due amount on the associated loan agreement by days. During the forbearance period, the Lender will not take any action or make any defaults regarding collection, payment, or interest on the original agreement.


The forbearance and loan modification will be in effect for days unless an extension is agreed upon in writing by both parties. This forbearance agreement has no retroactive qualities and does not apply to any future agreements made in regard to the original loan or credit agreement. All previous debts and interest accrued will continue to apply.


. Absence of Waiver

No further modifications or forbearances concerning the original credit or loan agreement will be inferred or implied by this agreement. If any portion of this agreement is deemed illegal or inadmissible, its dismissal will not affect the terms of the original agreement.


This forbearance agreement shall not constitute a waiver of any right or term contained in the original loan agreement documents. The Lender shall continue to enjoy the full legal protections and benefits outlined in the original loan agreement.


. Governing Law

This Agreement shall be construed in accordance with the laws of the .


. Authority

This document has been prepared mutually by both the Borrower and the Lender, and accurately reflects both parties' intentions, requests, and interests.


The parties signing this forbearance agreement hereby warrant that they are authorized to enter into agreements on behalf of the parties involved in the associated loan agreement.


By signing below, the Lender and Borrower agree to the terms of this forbearance agreement as an addendum to the existing loan agreement.




By: Date:



By: Date:


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