If you have a loan that’s in default, your first plan of action should be to discuss an arrangement where the bank will forbear from filing a lawsuit, foreclosing or otherwise seizing assets. To obtain this forbearance a borrower usually needs to agree to:
• make regular payments
• pledge additional collateral
• release the bank of claims
• waive defenses and a jury trial
• agree to other terms and conditions.
Though the terms of a forbearance agreement may initially seem onerous, they are helpful to borrowers most of the time because the enable debtors in default the opportunity to avoid bankruptcy.