A moratorium allows you to delay the payment of a debt for a finite period of time. In the loan context, this is also known as a deferment or forbearance. If you are facing a temporary hardship, you can request a moratorium and briefly postpone your loan payments. This does not release you from having to pay interest on the loan, but does release you from those payments for an agreed upon number of months.
Check the Internet
Some lenders allow you to file an application for a loan moratorium online. These vendors may have automatic eligibility checks that allow you to find out whether you meet the deferment criteria almost instantly.
Contact Your Lender
If you cannot find your solution online, contact your lender’s customer service department and let them know that you are interested in deferring your loan payments. Be clear about the moratorium terms and all of your options. Find out if the missed payments will be evenly disbursed over your future payments or if your loan term will be extended.
Complete an Investigation
Be prepared to answer tough questions. Before approving loan moratoriums, some lenders may require a lengthy investigative process. The loan officer will want to know the specific reasons why you need the deferment, ask about your credit history and inquire as to the length of your requested moratorium. Don’t be caught off guard. Expect to answer difficult and awkward questions and remain calm.
Review Your Repayment Options
In addition to postponing your loan payments, you may be able to work with your lender to lower your monthly payments or restructure your loan. While its great to explore all of your options, don’t make any hasty decisions.
Gather the Appropriate Documentation
You will need paperwork to verify the cause of your hardship. If you lost your job, you will need evidence of termination or a letter from your state unemployment agency. If you're being deployed, request a letter from your commanding officer. If you're unable to work because of an injury, get a statement from your physician. Whatever the case may be, you will need proof. You should also make copies of any financial paperwork that shows your current debt burden. This includes your credit-card bills and proof of any other loans you have.
Draft a Hardship Letter
Armed with information from your lender and the relevant paperwork, craft a letter that explains why you need a moratorium on your loan. Reiterate anything you discussed with your lender and be specific. State that your financial situation is only temporary. While your lender may be willing to suspend your payments, they want to know that you will be able to meet your loan obligations once the moratorium expires. Be sure to attach all of the evidentiary paperwork.
Submit the Hardship Request
Send your hardship letter to your lender and wait for approval. Once you file your deferment application, the waiting game begins. Be patient, and take the time to consider how you will approach your loan situation in the rare case your loan is not approved.
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