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

Issue

2

First Page

201

Last Page

224

Publisher

Duke University School of Law

Keywords

Law and Society, Nonprofit Organizations, Organizations, Politics (General), Social Welfare, Motor Vehicles, Motor Vehicle Transport, Railroads, Rail Transport, State and Local Government Law, Traffic Accidents, Transportation and Travel (General), Traffic Laws, Transportation Law, Criminal Law and Procedure

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

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