A common action taken by creditors in the event of default is to renegotiate the loan.

Question

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Creditors often prefer renegotiating the loan with the borrower rather than resorting to legal action or debt collection. This allows them to recover some or all of the outstanding debt and avoid the costs associated with litigation or collection. Renegotiation may involve modifying the terms of the loan, lowering the interest rate, extending the repayment period, or reducing the amount of the debt.

A Common Action Taken by Creditors in the Event of Default