Publication Date
2022
Journal
Law and Contemporary Problems
Abstract
As part of federal and state relief programs created during the COVID-19 pandemic, many American households received pauses on their largest debts, particularly on mortgages and student loans. Others may have come to agreements with their lenders, likewise pausing or altering payment on other debts, such as auto loans and credit cards. This relief allowed households to allocate their savings and income to necessary expenses, like groceries, utilities, and medicine. But forbearance does not equal forgiveness. At the end of the various relief periods and moratoria, people will have to resume paying all their debts, the amounts of which may have increased to account for any missed or reduced payments. Yet in the interim months, people have faced persistent unemployment and dwindling household wealth. Many likely will be unable to resume all debt payments, leading them into formal or informal bankruptcy. Incentivizing lenders to work with people to craft successful loan modifications will stave off a swell of bankruptcy filings and economic loss. The 2008 financial crisis showed how poorly prepared creditors were to offer successful debt workouts. Now is the time for policymakers to plan for the coming crash of needed loan modifications across consumer credit products. This Essay sketches a path for how that should be done.
Volume
85
First Page
201
Publisher
Duke University School of Law
Keywords
COVID-19, coronavirus, consumer debt, consumer credit, debt collection, forbearance, moratorium, modification, mortgages, mortgage servicing, loan servicing, auto loan, credit cards, student loans, bankruptcy, foreclosure, repossession, garnishment, CARES Act, American Rescue Plan Act, CFPB, UDAAP
Disciplines
Banking and Finance Law | Criminal Law | Criminal Procedure | Food and Drug Law | Gaming Law | Law | Law and Society | Nonprofit Organizations Law | Science and Technology Law | Social Welfare Law
Recommended Citation
Pamela Foohey, Dalie Jimenez & Christopher K. Odinet,
Steering Loan Modifications Post-Pandemic,
85
Law & Contemp. Probs.
201
(2022).
https://larc.cardozo.yu.edu/faculty-articles/692
Included in
Banking and Finance Law Commons, Criminal Law Commons, Criminal Procedure Commons, Food and Drug Law Commons, Gaming Law Commons, Law and Society Commons, Nonprofit Organizations Law Commons, Science and Technology Law Commons, Social Welfare Law Commons
