Definition
A deferred payment is an agreed upon postponement of an installment loan payment.
Analysis
Some lenders will, at their discretion, allow for a debtor to defer a payment to compensate for a financial hardship that affected the debtor’s ability to stay current on the loan. The purpose of allowing a deferred payment is to provide a means for a financially distressed debtor to still fulfill the terms of the loan contract when their ability to do so is threatened by a weakened financial situation.
Deferred payments are very common for federally guaranteed student loans. Most student loans allow for students to defer payments until 6 months after they graduate. They may be able to defer payments at another time if they are between jobs. Additionally, students may be able to request a forbearance, which can allow for delinquent payments to be shifted to the end of the loan.
Mortgage lenders and other installment loan providers may also be willing to allow a homeowner to defer one or more payments. Usually, they will require some documentation of financial hardship. A housing counselor that specializes in loss mitigation may be able to help a financially distressed mortgage holder negotiate with their lender to defer some payments. Other options may also be available.
