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Navigating workout agreements in Texas

Sometimes it can take an individual or business in Texas longer than expected to settle their loans. When this happens, a lawsuit is not always the only means to force their hands to repay. The creditor and their debtor can explore the possibility of a workout arrangement to try to come to a resolution that suits them both.

Understanding a workout arrangement

A workout arrangement is an out-of-court negotiation between a creditor and a debtor to try to reach an agreement on repayment terms. This could involve changing the interest rate, extending the term of the loan or coming up with a new payment plan. The idea behind workouts/restructuring is that it can be less expensive and time-consuming than going through the litigation process.

There are some things to keep in mind before entering into a workout arrangement. First, both parties must be willing to negotiate in good faith. Second, you should memorialize any agreement you reach in writing and signed by both parties. This can help to avoid any misunderstandings down the road.

Making a workout arrangement

The first step in entering into a workout arrangement is to send a demand letter to the debtor requesting payment. If the debtor does not respond or makes it clear that they are not able to repay the debt, then you can start negotiations for a workout arrangement.

During negotiations, both parties should be open and honest about their respective positions. It is also important to keep in mind that there is no guarantee that you’ll reach a workout arrangement. If this is the case, then you may need to pursue other legal options, such as filing a lawsuit.

Although they are good, workout agreements do not work for everyone. For example, if the debtor is not cooperative or refuses to negotiate in good faith, then a workout agreement is likely to fail. You may also be giving up your right to pursue other legal options when entering this arrangement.