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Forbearance – COHFP.com


Loan forbearance is a temporary relief option for borrowers who are struggling to make their monthly payments due to financial hardship. It allows you to pause or reduce your payments for a certain period of time, usually up to 12 months. However, loan forbearance is not a free pass. You will still owe the interest that accrues during the forbearance period, and you will have to resume your payments once the forbearance ends. Here are some steps you should take if you are considering loan forbearance:

1. Understand your options and eligibility.

Different types of loans have different forbearance programs and requirements. For example, federal student loans offer several types of forbearance, such as economic hardship, unemployment, or COVID-19 related forbearance. Private student loans, mortgages, and other loans may have different or more limited options. You should contact your loan servicer or lender to find out what forbearance programs are available for your specific loan and what criteria you need to meet to qualify.

2. Apply for loan forbearance.

Once you have identified the best option for your situation, you will need to submit an application for loan forbearance to your loan servicer or lender. Depending on the type of loan and the reason for your hardship, you may need to provide documentation to support your request, such as proof of income, unemployment benefits, medical bills, or other expenses. You should also specify how long you need the forbearance for and how much you can afford to pay during the forbearance period.

3. Review and sign the agreement.

If your application is approved, your loan servicer or lender will send you a written agreement that outlines the terms and conditions of your loan forbearance. You should read this carefully and make sure you understand what you are agreeing to. For example, some agreements may require you to make interest-only payments during the forbearance period, or to pay back the missed payments in a lump sum or over a short period of time after the forbearance ends. You should also check if the forbearance will affect your credit score or your eligibility for other benefits or programs. If you have any questions or concerns, you should contact your loan servicer or lender before signing the agreement.

4. Keep track of your payments and status.

During the forbearance period, you should monitor your loan account and statements regularly to make sure everything is accurate and up-to-date. You should also keep track of how much interest is accruing on your loan and how much you will owe once the forbearance ends. You should also stay in touch with your loan servicer or lender and notify them of any changes in your financial situation or contact information.

5. Plan ahead for repayment.

As the end of your forbearance period approaches, you should start preparing for resuming your payments. You should review your budget and income and see if you can afford your regular payments or if you need to adjust them. You should also explore other options that may help you manage your debt, such as refinancing, consolidation, deferment, forgiveness, or repayment plans. You should contact your loan servicer or lender at least a month before your forbearance ends to discuss your options and make arrangements for repayment.

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