التسوية الودية هي عملية تتعلق بحل النزاعات أو الخلافات بين طرفين بطريقة سلمية وبدون اللجوء إلى القضاء. الهدف من التسوية الودية هو الوصول إلى اتفاق يرضي جميع الأطراف المعنية، مما يساعد على تجنب الإجراءات القانونية المكلفة والوقتية. عادة ما تتضمن هذه العملية الحوار والمفاوضات وقد تتم بمساعدة وسيط أو محامي لتحقيق التفاهم المشترك.

A friendly settlement is when the lender allows the borrower to temporarily stop or reduce payments on the loan. There are many types of friendly settlements that can be applied in a variety of lender/borrower situations. They are often used in student loans.

Definitions and Examples of Friendly Settlements

If you borrowed money and then faced difficulties, you can request a friendly settlement from your lender. If the lender agrees, they will temporarily stop or reduce your payments. At the end of the agreed period, payments will resume.

Alternative name: friendly settlement

The types of difficulties can be varied. They may include medical emergencies, permanent disability, job loss, temporary unemployment, natural disasters, divorce, and others.

For example, from March 13, 2020, to August 31, 2022, borrowers of federal student loans are placed in administrative friendly settlement. During this time, federal student loan payments are automatically paused. However, individuals may choose to make payments if they wish to do so.

How Does a Friendly Settlement Work?

The key to a friendly settlement is that it is temporary. The duration of time allowed by the lender for the friendly settlement varies. For example, the maximum duration is 18 months before the borrower has to start repaying the payments again on mortgage loans.

Note: A friendly settlement can help by:

• Extending the loan term
• Postponing payments on the loan
• Reducing payments on the loan

One important feature of a friendly settlement is that interest continues to accrue during the pause period. If you can, you may choose to continue paying the interest during the friendly settlement period. If you do not, the interest will be added to the principal amount owed. This means you will pay more total interest over the life of the loan.

Types of Friendly Settlements

There are three main types of loans that you may receive a friendly settlement on:

Student Loans

Student loans may be the most common type of deferred loan. This debt has become an increasingly burdensome type. Former students with outstanding loans are more likely to put their loans in a friendly settlement at least once.

The latest available statistics are from 2013, showing that 32% of student loans were never in a friendly settlement, 48% were in friendly settlement for less than 18 months, and 20% were in friendly settlement for more than 18 months. By November 2020, there were over 22 million former students in friendly settlement with direct loans totaling nearly $887 billion.

If you’re considering applying for a friendly settlement for a student loan, it’s important to know the risks. Remember that you will be responsible for paying the increasing costs of interest that accrue.

A friendly settlement should not be a means to defer repayment. It is not a long-term strategy to make loan repayment more manageable and should only be a solution for an emergency situation.

Note: There are two types of friendly settlements for former students and their student loans:

• The first type is discretionary or general friendly settlement. It is available to anyone facing any type of financial hardship. It should be a last resort.
• The other type of friendly settlement for student loans is mandatory friendly settlement. This type is available if you are in the National Guard and have been deployed, if you are in a medical residency program or internship training program, or if your payment exceeds 20% of your monthly income. It is called “mandatory friendly settlement” because the loan provider is required to grant it to you under these circumstances.

Mortgage Loans

If you have a mortgage loan and are facing financial difficulties, you may be eligible for a friendly settlement on your loan. Banks and other lenders know that homeowners can face significant financial hardships for good reasons.

They will…

You and the lender work together to determine if you qualify for forbearance. You will also discuss the terms of the agreement, including the duration of the forbearance period, the amount of payment reduction, and how much you will repay to the lender.

You may have to repay the lender with a higher interest rate, but forbearance will help you avoid foreclosure on your home. It can also help preserve your credit rating.

Once the forbearance period ends, you will need to repay the principal, interest, property taxes, and insurance on your home according to the forbearance agreement.

Credit Card Debt

During the economic downturn of 2008-2009, default rates on credit cards rose. They increased again during the first and second quarters of 2020. Failing to pay and incurring late fees can deteriorate your credit rating. Many banks that issue credit cards offer forbearance programs that can provide you with some relief. If you are facing financial difficulties, reach out and ask about their credit counseling services. They may be able to help you apply for forbearance.

Key Takeaways

• Forbearance is when the creditor allows the borrower to temporarily stop or reduce payments on the loan.
• Types of hardships include medical emergencies, permanent disability, job loss, natural disasters, divorce, and more.
• There are three main types of loans that may qualify for forbearance: student loans, mortgage loans, and credit card debt.
• Forbearance can help save your credit rating and assist you in avoiding other penalties, but it may also mean paying higher amounts over the time period.

Source: https://www.thebalancemoney.com/what-is-forbearance-4584891