What Is Forbearance?

When you’re facing financial hardship and can’t make your loan payments, forbearance might be an option. It’s a temporary solution that allows you to pause or reduce payments, without going into default. But it’s not a free pass.

In this guide, we’ll break down what forbearance means, how it works, when it’s a good option, and what to watch out for when requesting it.

Key Takeaways

• Forbearance is a temporary pause or reduction in loan payments, not a cancellation of debt.
• It’s typically used during short-term financial hardship and must be arranged with your lender.
• Interest may continue to accrue, which can increase your total loan cost.
• Borrowers should communicate early and get terms in writing to avoid credit damage.

What Is Forbearance?

Forbearance is an agreement between a borrower and a lender to temporarily pause or reduce loan payments during a period of financial difficulty. The borrower is still responsible for repaying the loan, and interest often continues to accrue during the forbearance period.

Forbearance doesn’t cancel or forgive your debt—it simply gives you time to get back on your feet without falling into delinquency or default.

How Does Forbearance Work?

1. The borrower applies for forbearance through their lender or loan servicer.
2. The lender reviews the request based on hardship, payment history, and loan type.
3. If approved, payments are paused or reduced for a set period (usually a few months).
4. Once the forbearance period ends, regular payments resume, and missed payments may be repaid through a new schedule or added to the loan term.

Forbearance vs. Deferment

These terms are often confused, especially with student loans. Here’s the difference:

Feature	Forbearance	Deferment
Interest Accrues?	Yes (usually)	Sometimes no (e.g., subsidized student loans)
Hardship-Based?	Yes	Yes or eligibility-based (e.g., school enrollment)
Credit Impact	Neutral if current on payments	Neutral if approved
Repayment Required Later	Yes (full amount still owed)	Yes

Types of Loans That Offer Forbearance

Forbearance may be available for various loan types, including:

• Federal student loans
• Private student loans
• Mortgages (especially during crises like COVID-19)
• Auto loans
• Personal loans (limited availability)

Note: Not all lenders offer forbearance. You should always understand the loan’s rules before you sign.

When Should You Request Forbearance?

Forbearance can be helpful during:

• Job loss or income reduction
• Medical emergencies or major health expenses
• Natural disasters or unexpected life events
• Temporary financial hardship

It’s not meant for ongoing financial instability or used to delay inevitable defaults. It’s best reserved for short-term setbacks.

Pros and Cons of Forbearance

Pros	Cons
Helps avoid default or delinquency	Interest typically continues to accrue
Protects your credit when approved	You still owe full repayment after the pause
Provides temporary financial relief	May increase the overall cost of your loan
Can offer peace of mind during hardship	Not available for all types of loans

How to Request Forbearance

Follow these steps:

1. Contact your lender or loan servicer as soon as you anticipate trouble making payments.
2. Explain your financial situation and the reason for requesting relief.
3. Provide supporting documentation, if required.
4. Review the terms of the forbearance agreement—including how long it lasts and how interest is handled.
5. Get written confirmation before stopping payments.

At Simple Fast Loans, we value transparency and encourage early communication if you anticipate missing a payment. We may be able to offer alternate solutions even if formal forbearance isn’t available.

Forbearance and Your Credit Score

Approved forbearance should not harm your credit score, as long as it's officially arranged with your lender. However:

• Missed payments before requesting forbearance may still be reported
• Failure to resume payments after forbearance may result in delinquency or default

Always ensure your forbearance is documented and confirmed before stopping payments.

Related Frequently Asked Questions (FAQs)

Here are the questions people most often ask about forbearance.

Does Interest Stop During Forbearance?

Usually not. Most loans continue to accrue interest even if payments are paused.

Do I Have To Pay a Lump Sum After Forbearance Ends?

Not typically. Repayment options vary—some lenders spread missed payments over time, others add them to the end of the loan.

Can I Apply More Than Once?

In some cases, yes. But lenders may limit the number of forbearance periods they offer.

Does Forbearance Forgive My Debt?

No. It postpones payment, but the full loan balance must still be repaid.

Note: The content provided in this article is for informational purposes only. Contact your financial advisor regarding your specific financial situation.