Types of Moratoriums

1. General Moratorium: A general moratorium is the temporary suspension of a national or regional law or rule. Usually, a government imposes it in reaction to a crisis—like a natural disaster or an economic downturn. For instance, in order to keep people from losing their houses during the COVID-19 epidemic, several governments implemented universal moratoriums on evictions.

2. Specific Moratorium: It is a brief halt to the application of a law or rule that affects a particular set of individuals or activities. It is frequently employed to permit further research or discussion on a subject. For instance, while creating a new zoning plan, a city council may decide to put a specific moratorium on new building projects in a particular neighborhood.

3. Debt Moratorium: A temporary halt to debt payments is known as a debt moratorium. Either the government or a commercial lender may impose it. During a recession, for instance, a government could put a debt moratorium on student loans.

4. Loan Moratorium: A particular kind of debt moratorium that is applicable to loans is called a loan moratorium. It is frequently used to help borrowers make up for missing payments or keep their loans from going into default.

5. Legislative Moratorium: A legislative moratorium is a brief halt to a measure that a legislature is debating. It is frequently employed to permit more discussion or legal modifications.

Moratorium: Meaning, Objectives, Mechanisms and Types

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What is a Moratorium?

A moratorium is a brief suspension of an action or law until further circumstances, such as resolving the difficulties that first prompted it, necessitate its lifting. A company, the government, or regulators may all implement a moratorium. Moratoriums are frequently put in place as a response to brief financial difficulties. For instance, a company that has overspent its budget can stop new hires until the beginning of the next fiscal year. A moratorium on certain actions, including the process of collecting debts during bankruptcy proceedings, may be ordered in court....

Objectives of Moratoriums

1. Reduce Hardship: Moratoriums are commonly utilized to provide short-term assistance to people who are having financial troubles. For example, a loan moratorium may be imposed during a recession to give debtors time to recover before obligations start up again....

Mechanisms of Moratoriums

1. Emergency Response: A moratorium is frequently a response to an immediate crisis that throws off a company’s regular operations. For example, during a natural calamity such as an earthquake or flood, a government may impose an emergency embargo on certain financial activity. It will then be lifted as soon as regular business can resume....

Types of Moratoriums

1. General Moratorium: A general moratorium is the temporary suspension of a national or regional law or rule. Usually, a government imposes it in reaction to a crisis—like a natural disaster or an economic downturn. For instance, in order to keep people from losing their houses during the COVID-19 epidemic, several governments implemented universal moratoriums on evictions....

Conclusion

A moratorium serves as a temporary halt to an activity or obligation. Moratoriums may be useful tools if they are applied properly. They can inspire deliberate decision-making, avert unfavorable outcomes, enable solutions, and offer momentary respite. It’s critical to keep in mind that moratoriums are a temporary fix. They are a stopgap solution meant to free up time for improved decision-making or to deal with pressing issues. The application of moratoriums varies according to the particular circumstances and the level of government. Enacting them also involves procedural procedures and legal issues....

Frequently Asked Questions on Moratorium – FAQs

Does Moratorium have no interest?...