6.2.5 Comparison with other NPE workout options

Credit institutions should use a net present value approach to determine the most suitable and sustainable workout option for borrowers’ varied circumstances, having regard to the fair treatment of the consumer, and should compare the net present value of the envisaged forbearance measure with the net present value of repossession and other available liquidation options. The parameters used in the calculation, such as the assumed liquidation time horizon, discount rate, cost of capital and liquidation cost, should be based on observed empirical data.