What are the advantages of a loan workout plan?

The advantages to a loan workout plan will be divided between a lender and a borrower. For the borrower, there is a chance to avoid default on the loan by creating a voluntary repayment agreement with the lender. Further, the borrower will typically repay only a fraction of the total cost owed. For the lender, a loan workout plan is essentially a way to settle a debt without going to court. Lenders typically recover only a small amount if a default does occur. With a loan workout plan, they can recover this small amount and completely avoid the expenses associated with an attempt to collect.

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