Forbearance Agreement Example

A forbearance agreement is a legal contract between a borrower and a lender that outlines an agreement to temporarily pause or reduce loan payments. In light of the COVID-19 pandemic and its economic impact, many people have been seeking forbearance agreements with their lenders.

If you`re considering a forbearance agreement, it`s important to understand what it entails. Here`s a hypothetical example of a forbearance agreement:


Lender: XYZ Bank

Borrower: John Smith

Loan Information:

Loan amount: $50,000

Loan term: 5 years

Interest rate: 4%

Monthly payment: $927.16

Forbearance Agreement Terms:

Due to unforeseen circumstances related to the COVID-19 pandemic, the borrower is experiencing financial hardship and is unable to make the monthly loan payments as originally agreed. The lender agrees to temporarily pause the monthly payments for a period of six months, starting on April 1, 2020, and ending on September 30, 2020. During this time, interest will continue to accrue on the loan.

After the forbearance period ends, the borrower agrees to resume making the monthly payments as originally agreed. If the borrower is unable to make the full payment, the lender may agree to a modified payment plan or other options to help the borrower repay the loan.

The borrower understands that the temporary pause in payments does not waive the borrower`s obligation to repay the loan, and the missed payments will be added to the end of the loan term.

The borrower agrees to provide the lender with any requested documentation, such as proof of hardship or income, and to communicate with the lender throughout the forbearance period.


A forbearance agreement can provide some much-needed relief for borrowers who are struggling to make loan payments due to financial hardship. However, it`s important to understand the terms of the agreement and communicate effectively with the lender to ensure a successful outcome. If you`re considering a forbearance agreement, consult with a legal or financial professional for guidance.

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