Recovery

Recovery, in finance, is the process of collecting overdue or lost funds from borrowers who have defaulted on loans or other financial obligations. It helps lenders reduce losses, protect financial stability, and maintain the health of their portfolio.

Example

When a borrower defaults on a loan, the lender starts recovery efforts to collect the outstanding debt. This may include contacting the borrower to agree on a new repayment plan, restructuring the loan, or, for secured loans, repossessing collateral such as a home or vehicle. In some cases, the lender may sell the defaulted debt to a collection agency or take legal action to recover the funds. With effective recovery strategies, financial institutions can reduce the impact of non-performing loans, maintain a healthy loan portfolio, and protect their financial interests.

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