In an interview with the Illinois News Bureau, Professor Bob Lawless, a leading consumer credit and bankruptcy expert, discusses the potential for a surge in consumer bankruptcy filings due to the coronavirus pandemic. An excerpt from the interview follows:
Are we likely to see a rash of consumer bankruptcies in the U.S. due to the COVID-19 pandemic?
It’s hard to say what’s going to happen. Most everyone expects consumer bankruptcies to increase, and I think that’s probably right. The question is what the shape of the curve will look like. Will it be a gradual and steady increase, or will it be a sharp spike?
I doubt there will be a surge in consumer bankruptcy filings in the next few months. There is a foreclosure moratorium on all federally backed mortgages, which are two-thirds to three-quarters of all mortgages. Student loan collections have stopped. There is a lot of support for state moratoriums on debt collections and rent evictions. All of these initiatives will reduce the immediate pressure for people to declare bankruptcy.
Read the full article at news.illinois.edu.