A workout is a mutual agreement negotiated between a debtor and creditor to manage and resolve a debt without resorting to formal bankruptcy proceedings. Generally, the workout includes waiving any existing defaults, restructuring the loan’s terms and covenants, and renegotiating the terms of debt obligations, such as extending repayment periods, reducing interest rates, or altering payment schedules.
[Last reviewed in November of 2024 by the Wex Definitions Team]
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