Economy

Payment Deferrals Were a Lifeline for Millions During COVID. What Happens When Those End?

Consumer advocates warning of a looming debt crisis say they want the government's watchdog to take an aggressive role in policing predatory entities

A stock photo of cash.
Photographer: Paul Yeung/Bloomberg via Getty Images

The federal government's response to COVID-19 has allowed millions of Americans to defer payments on their mortgages, rent, student loans and utility bills.

But as more people are vaccinated and the country sees a return to normal life on the horizon, payments on trillions of dollars of those debts could resume soon, even if debtors remain out of work or in financial distress because of the economic crisis the outbreak wrought.

Consumer finance and regulatory experts, as well as Democratic lawmakers, warn that the coming debt crisis will be catastrophic for many people and that they could be a huge windfall for predatory financial institutions like debt collectors and payday lenders — industries regulated by the Consumer Financial Protection Bureau, or CFPB, which President Joe Biden is trying to rebuild after it was hollowed out under former President Donald Trump.

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