Document background
The Forbearance Agreement Loan is a critical document in Canadian lending practices, used when a borrower has defaulted or is likely to default on their loan obligations, but where there is potential for recovery or restructuring. This agreement temporarily suspends the lender's right to enforce their remedies while establishing new terms for the loan's management. The document is essential in both commercial and personal lending contexts, requiring careful consideration of federal legislation such as the Bank Act and Interest Act, as well as provincial regulations governing secured transactions and consumer protection. A properly structured Forbearance Agreement Loan should balance the lender's need to preserve their rights and security interests with providing the borrower a realistic opportunity to resolve their default situation. The agreement typically includes detailed terms about payment modifications, additional reporting requirements, enhanced security arrangements, and specific conditions that must be met to maintain the forbearance period.
