Recovery

Recovery, in the context of finance, is the process of recouping lost or delinquent funds from borrowers who have defaulted on their loans or other financial obligations, like a steadfast steward reclaiming the lost wealth of a kingdom. The recovery process is essential to minimize losses, maintain financial stability, and ensure the health of a lender's portfolio.

Example

When a borrower defaults on a loan, the lender initiates recovery efforts to retrieve the outstanding debt. These efforts may include contacting the borrower to negotiate a new repayment plan, restructuring the loan, or, in the case of secured loans, repossessing collateral such as a home or vehicle. In some instances, a lender may sell the defaulted debt to a collection agency or engage in legal proceedings to recover the funds. By implementing effective recovery strategies, financial institutions can reduce the impact of non-performing loans, maintain a healthy loan portfolio, and protect their financial interests.