Workout Agreement Law and Legal Definition
Workout agreement is a mutual agreement entered into by a borrower and a lender to reschedule loan payments. Loan payment can be modified by extending the original maturity date. Foreclosure and bankruptcy proceeding can be avoided through a workout agreement. Loans which are written off as bad debt are negotiated in new terms and the lender expects to collect from recoveries. Debt service burden will be reduced in a workout agreement.