A workout plan in finance refers to an arrangement between a lender and borrower to restructure the terms of a loan to prevent default. This plan is often implemented when the borrower faces financial hardship and struggles to meet original payment terms. The workout plan may include modifying payment schedules, reducing interest rates, or extending loan terms to ease repayment. These agreements benefit both parties: borrowers avoid foreclosure or legal action, and lenders reduce the risk of significant financial losses. Successful workout plans help borrowers regain stability and fulfill their obligations.