DEFINITION of 'Moratorium'

1) A period of time in which there is a suspension of a specific activity until future events warrant a removal of the suspension or issues regarding the activity have been resolved.

2) In bankruptcy law, a legally binding halt of the right to collect debt.

BREAKING DOWN 'Moratorium'

1) For example, if a company is going through rough times it might have a moratorium on advertising spending. In other words, to cut costs, it won't spend any money on advertising.

2) Such action may be imposed by a government, or taken voluntarily by a private business, usually in times of economic crisis such as an earthquake or flood, in order to provide people with time to stabilize their finances before dealing with potential problems such as a mortgage default and foreclosure.

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  1. What's the difference between a grace period and a moratorium period?

    A grace period falls between the time when a credit card billing cycle ends and when the payment is due. This grace period ... Read Full Answer >>
  2. Do FHA loans have prepayment penalties?

    Unlike subprime mortgages issued by some conventional commercial lenders, Federal Housing Administration (FHA) loans do not ... Read Full Answer >>
  3. Can FHA loans be refinanced?

    Federal Housing Administration (FHA) loans can be refinanced in several ways. According to the U.S. Department of Housing ... Read Full Answer >>
  4. Can FHA loans be used for investment property?

    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>
  5. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
  6. How many FHA loans can I have?

    Generally, the Federal Housing Administration (FHA) does not insure more than one mortgage per borrower. This is to prevent ... Read Full Answer >>

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