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.
Key Takeaways
- A moratorium is a brief suspension of a law or rule or a stop to business as usual.
- Moratoriums are typically imposed to ease temporary financial hardship or give time to address associated problems.
- A moratorium is a legally mandated pause in creditor collection under bankruptcy law.
- A moratorium offers financial relaxation and lessens the burden on enterprises, consumers, and other crisis-affected parties.
- The goals and intentions vary according to whatever level of government imposes the halt.
Table of Content
- Objectives of Moratoriums
- Mechanisms of Moratoriums
- Types of Moratoriums
- Conclusion
- Frequently Asked Questions on Moratorium- FAQs