In what scenario may a licensee retain their license despite previous defaults on loans?

A licensee may retain their license despite previous defaults on loans when they have established a repayment plan because this indicates that they are taking proactive steps to manage their financial obligations. Establishing a repayment plan often demonstrates responsibility and commitment to resolving debts over time. Regulatory agencies recognize that individuals can encounter financial difficulties and that creating a structured plan to repay debts is a constructive measure. This option suggests that the licensee is engaged in a process to remedy their financial situation rather than ignoring their obligations.

In contrast, merely repaying debts in full, while beneficial, is not the only route to maintaining a license in this scenario—even if it's a valid option, it is not the direct focus of why a license might be retained amidst prior defaults. Taking legal action could imply adversarial approaches rather than resolution, which might not serve as a valid reason for retaining a license. Lastly, being debt-free for one year does not directly relate to proactive management of existing debts and could be situationally applicable, lacking emphasis on the present handling of defaults. The key factor here is the establishment of a repayment plan, reflecting an ongoing effort to reconcile the financial situation and thereby satisfying regulatory expectations.