A suspension of loan payments for a period of time.

A suspension of loan payments for a period of time.

• A. Forbearance
• B. Moratorium
• C. Deferment
• D. Reprieve

Answer: (B)

A suspension of loan payments for a period of time is a moratorium. It refers to a formal pause on obligations that stops payments for a set duration, often established by policy, law, or the lender in response to a specific situation. The key idea is a temporary standstill on payments rather than a negotiated relief or a program-specific postponement. This differs from forbearance, which is a lender-approved hardship relief that may involve pausing or reducing payments but is specifically driven by the borrower's circumstances and usually involves ongoing terms and interest accrual. Deferment is a postponement tied to particular programs (like certain student loan situations) with rules about whether interest continues to accrue. Reprieve isn’t a term used for loan relief.

A suspension of loan payments for a period of time is a moratorium. It refers to a formal pause on obligations that stops payments for a set duration, often established by policy, law, or the lender in response to a specific situation. The key idea is a temporary standstill on payments rather than a negotiated relief or a program-specific postponement.

This differs from forbearance, which is a lender-approved hardship relief that may involve pausing or reducing payments but is specifically driven by the borrower's circumstances and usually involves ongoing terms and interest accrual. Deferment is a postponement tied to particular programs (like certain student loan situations) with rules about whether interest continues to accrue. Reprieve isn’t a term used for loan relief.