Allowing millions of borrowers to defer debt payments allows them to focus on other necessities and lenders to slow a near-term spike in reported delinquencies and charge-offs. But it doesn’t solve the solvency crisis now spreading nor the debt write-offs coming. See Millions skip credit card and car payments:
Lenders hope that being flexible with borrowers will buy time for the economy to recover and for consumers to get back on track with payments. But lenders can shoulder the unpaid loans for only so long, and many are bracing for a mountain of defaults that they’ll eventually write off as a loss.
Consumer debt had climbed to record levels before the pandemic. WSJ’s AnnaMaria Andriotis explains what’s happening now that millions of people are unable to make payments on credit cards and auto loans.
Here is a direct link to an audio report.
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