During the forbearance period, the borrower is not required to make any loan payments
but interest may continue to accrue on the outstanding balance, depending on the terms of the loan agreement
There are two main types of forbearance on loans: mandatory forbearance and discretionary forbearance.
Mandatory forbearance is required by law for certain types of loans, such as federal student loans, in specific situations such as active duty military service or medical residency
Discretionary forbearance, on the other hand, is up to the lender’s discretion and can be granted on a case-by-case basis for various reasons, such as job loss or illness.
Forbearance can have both positive and negative consequences for borrowers, depending on their individual situation
On the one hand, forbearance can provide temporary relief from loan payments and give borrowers time to get back on their feet financially
It can also help prevent default or delinquency on the loan, which can have negative consequences for credit scores and future loan opportunities.