The city of Chicago, state of Colorado, and the House Financial Services Committee all either took steps or proposed taking steps to address debt collection during the coronavirus outbreak, joining a growing number of governments across the country to do so.
Among the proposals floated by Rep. Maxine Waters [D-Calif.], the chair of the House Financial Services Committee, is one that would prohibit the collection of all consumer debt during the pandemic and for at least 120 days until after the pandemic is over. Consumer debt would include all medical debts and prohibit the garnishment of wages during that period. The proposal would also prohibit any negative items from being reported on consumers’ credit reports, and provide $2,000 a month to each adult and $1,000 a month to each child.
It would also provide help to small businesses, many of which are collection agencies, including suspending the payment of commercial rent, providing 100% tax rebates for payroll taxes, and make $50 billion in grants available.
Also making a proposal yesterday was the attorney general of Colorado, who “urged” student lenders and creditors to “hold off” on debt collection efforts during the crisis.
“Today, alongside House Majority Leader Alec Garnett and Rep. Leslie Herod, I urge student loan servicers, creditors, and debt collectors to refrain from mandatory debt collection efforts from those who are unable to pay because of their financial circumstance,” said Phil Weiser, the AG of Colorado, in a statement. “Moreover, to the extent that such providers can work proactively with borrowers to help them best manage their situation, they will join other businesses taking responsible and compassionate efforts to lessen the impact of this crisis.”
Going a step further than making a proposal was Lori Lightfoot, the mayor of Chicago, who suspended debt collection on a number of fronts, including utility bills, non-safety-related tickets, and other debts owed to the city.
“This is a common sense way that we can help mitigate the burdens and pressures many are feeling. We know that these practices disproportionately impact the residents that are most in need during this crisis,” said Mayor Lightfoot, in a statement. “We realize that many of our residents are strapped for cash right now as the effort to contain the spread of the coronavirus has created difficult economic circumstances for those who are unable to work. We don’t want to further impact people who can’t afford to pay these penalties today and want to provide some breathing room to help them prioritize how to address their financial obligations.”
In a press release, the mayor announced these were the “first steps” to reduce the financial impact of coronavirus, which likely hints that other steps are coming.
