Sen. Elizabeth Warren [D-Mass.] and Sen. Sherrod Brown [D-Ohio] yesterday released a proposal that calls on Congress to enact additional consumer protections, including allowing consumers to pause any and all of their debt payments for the duration of the coronavirus pandemic, because “bills keep coming and debts keep piling up.”
A copy of the proposal, which outlines six different steps that should be taken to protect consumers, can be accessed by clicking here.
Pointing out that the money individuals received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act will not go very far, the proposal seeks to use tools other than money to help consumers get through the COVID-19 crisis. Among the items included in the proposal are:
- Stop “predatory” debt collectors and banks from “ripping” stimulus funds out of the hands of consumers through garnishments
- Allowing consumers to put a pause on all debt payments
- Preventing negative entries on consumers’ credit reports as a result of the crisis
- “Broadly” cancel all student loan debt
- Ensure the Consumer Financial Protection Bureau is using its supervisory authority to monitor and detect consumer abuses
- Revamping the bankruptcy process to make it cheaper and easier to file, add additional protections, include student loan debt among those that can be discharged, and remove some of the paperwork included in the process
For the credit and collection industry, allowing consumers to put a pause on all debt payments is likely the most important component of the Senators’ proposal. The plan allows for individuals to keep making payments on their debts if they have the means and opportunity to do so, but people shouldn’t be “punished” in the form of late fees, accrued interest, or other penalties if they are not able to pay. And, when the crisis is over, the proposal says, consumers should have “additional” time to catch up on missed payments. The proposal also calls for the immediate halt to all garnishments, evictions, repossessions, and utility disconnections as well as “all proceedings against debtors.”
“Consumer spending drives our nation’s economy, and we will emerge from the current crisis,” the proposal says. “But if Americans are left drowning in debt at the end of it, our recovery will be hampered as people will spend less on goods and services.”
