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.
“As the pandemic winds down, there is a lot of debt overhang: deferred rent, deferred mortgages, deferred student loans. We’ve basically been living in suspended animation until the pandemic ends,” said Harvard Law School professor Howell Jackson, an expert on financial regulation and consumer protection who was a visiting scholar at the CFPB from 2013 to 2015.
“And at some point there is going to be an extraordinary number of people out there who are very vulnerable with debt, and we are going to have major debt collection issues,” he said. “We have already seen issues during the pandemic with payday lenders.”