a process for consideration of rescheduling or restructuring terms and conditions of a seriously delinquent loan to facilitate repayment and meet lending criteria and objectives. A workout is initiated when it becomes evident that the original terms cannot be fulfilled. For loans, grants, cooperative agreements, contracts, and other receivables, workout may also mean intensified collection action, including identification of appropriate collection mechanisms.

The process by which a borrower attempts to negotiate with a lender to restructure the borrower?s debt rather than go through foreclosure proceedings.

A debt which is in default but which the creditor allows the debtor to rectify by lengthening the time period of the loan, reducing the interest rate, or some other accommodation. An example is a bank that elects not to foreclosure on a mortgage because of the homeowner's nonpayment, but agrees to stretch out the payments.

The various ways to offset a foreclosure. (See moratorium, waiver)

A mortgage in which basic terms -- such as interest rate, term and monthly payment -- have been changed to prevent foreclosure. Not a normal practice in Canada.

An alternative action to foreclosure for the benefit of the lender and the borrower. Includes loan modification, short sales and various forms of forbearance. Also called “restructure.

A loan which is technically in default but under which the lender (mortgagee) is attempting to assist the borrower (mortgagor) in restructuring the terms of the loan or the time of repayment rather than proceeding with foreclosure.

A negotiated agreement between the debtors and its creditors outside the bankruptcy process.

A type of mortgage where basic terms such as interest rate, term, and monthly payment are altered to prevent foreclosure. This is not a typical practice in Canada.

A debtor's plan to take care of a debt, by paying it off or through loan forgiveness. Workouts are often created to avoid bankruptcy or foreclosure proceedings.

Informal repayment or loan forgivness arrangement between a borrower and creditors.

A procre whereby a borrower negotiates a restructuring of a mortgage or trust deed in lieu of a foreclosure.

Effort to resolve, through compromise, a problem between two sides. Alternately, when a creditor allows a debtor to rectify his default by lengthening the time period of repayment or reducing the interest rate.