Distressed Borrower Law and Legal Definition

A “distressed borrower” is a borrower who is unable to fully repay his or her debt due to financial difficulties. The difficulties may be either created by personal circumstance or the terms of the loan which s/he did not fully understand or was not able to meet when originally agreeing to the loan. The term "distressed borrower" is most commonly used to refer to homeowners at risk of foreclosure.