Empirical Working Paper
Summary:
The first major empirical analysis to focus primarily on consumers who sought assistance in managing credit card debts during the pandemic finds that more consumers obtained short-term payment relief on their credit cards than for any other type of loan except student debt, where forbearances were mandated by federal law.
The study also finds evidence that pandemic relief initiatives may have reduced damage to the credit scores and records of consumers who sought long-term assistance through credit counseling and debt management programs. Future research will explore whether these patterns affect the speed and extent of their financial recovery.
This report is the first phase of a longer project that will evaluate alternative repayment plan structures and data and technology pilot initiatives by nonprofit counseling agencies as a springboard for considering broader market and policy changes. FinRegLab is collaborating with researchers from The Ohio State University and Charles River Associates to analyze data from pilot programs organized by the National Foundation for Credit Counseling and other sources.
This working paper is an update of research published in January 2023.
Download the Empirical Working PaperDebt Resolution Options for Distressed Borrowers: Market & Policy Context
This report surveys the options that are available to consumers who are struggling with unsecured debt, including available research on the options’ scope and outcomes. It provides an overview of market and policy challenges as stakeholders ponder strategies to help consumers recover more quickly from personal and broader economic crises such as COVID-19.
Read MoreDebt Management Insights for Distressed Borrowers
FinRegLab is working with teams at The Ohio State University and Charles River Associates to evaluate new workout structures and data and technology applications for consumers who are struggling with unsecured credit. The project will use data from pilots organized by the National Foundation for Credit Counseling and other sources.
Learn MoreAcknowledgments
This empirical working paper is part of a broader research project organized by FinRegLab and the National Foundation for Credit Counseling to evaluate data, technology, and other innovations’ potential to help consumers recover more quickly from personal and economic crisis such as COVID-19. Support for this publication and other aspects of the project was provided by Bank of America, Capital One Financial Corporation, JPMorgan Chase, LendingClub, Synchrony, TD Bank, and the Wells Fargo Foundation.
The independent empirical research in this report has been conducted in collaboration with Dr. Marsha Courchane, Dr. Adam Gailey, and Connor Tragesser (Charles River Associates), and Dr. Stephanie Moulton, Sungmin Park, Matthew Pesavento and Rebecca Xie (John Glenn College of Public Policy at The Ohio State University). Coordination with the credit counseling agencies that contributed data for the analysis was facilitated by the National Foundation for Credit Counseling.
We would like to thank individuals who provided valuable feedback on this report. They include:
- David Silberman
- Conrod Robinson
We would also like to acknowledge FinRegLab team members who worked on convenings, interviews,
and reports related to this project. They include:
Kelly Thompson Cochran, Colin Foos, Gillous Harris, Tess Johnson and Zishun Zhao.
With support from
Bank of America is one of the world’s leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 67 million consumer and small business clients with approximately 4,000 retail financial centers, approximately 16,000 ATMs and award-winning digital banking with approximately 55 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes. Bank of America offers industry-leading support to approximately 3 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and approximately 35 countries. Bank of America Corporation stock (ATMs) is listed on the New York Stock Exchange.
Capital One Financial Corporation (www.capitalone.com) is a financial holding company which had $307.9 billion in deposits and $440.3 billion in total assets as of June 30, 2022. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses, and commercial clients through a variety of channels. Capital One, N.A. has branches located primarily in New York, Louisiana, Texas, Maryland, Virginia, New Jersey and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol “COF” and is included in the S&P 100 index.
JPMorgan Chase & Co. (NYSE: JPM) is a leading financial services firm based in the United States of America (“U.S.”), with operations worldwide. JPMorgan Chase had $3.8 trillion in assets and $288 billion in stockholders’ equity as of September 30, 2022. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing and asset management. Under the J.P. Morgan and Chase brands, the Firm serves millions of customers in the U.S., and many of the world’s most prominent corporate, institutional and government clients globally. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.
LendingClub Corporation (NYSE: LC) is the parent company of LendingClub Bank, National Association, Member FDIC. LendingClub Bank is the leading digital marketplace bank in the U.S., where members can access a broad range of financial products and services designed to help them pay less when borrowing and earn more when saving. Based on more than 150 billion cells of data and nearly $100 billion in loans, our advanced credit decisioning and machine-learning models are used across the customer lifecycle to expand seamless access to credit for our members, while generating compelling risk-adjusted returns for our loan investors. Since 2007, about 5 million members have joined the Club to help reach their financial goals. For more information about LendingClub, visit https://www.lendingclub.com.
Synchrony is a premier consumer financial services company delivering one of the industry’s most complete digitally-enabled product suites. The company’s experience, expertise and scale encompass a broad spectrum of industries including digital, health and wellness, retail, telecommunications, home, auto, outdoor, pet and more. They have an established and diverse group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers, which we refer to as our “partners.” They connect our partners and consumers through our dynamic financial ecosystem and provide them with a diverse set of financing solutions and innovative digital capabilities to address their specific needs and deliver seamless, omnichannel experiences. We offer the right financing products to the right customers in their channel of choice.
TD Bank, America’s Most Convenient Bank, is one of the 10 largest banks in the U.S., providing over 9.8 million customers with a full range of retail, small business and commercial banking products and services at more than 1,100 convenient locations throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. In addition, TD Bank and its subsidiaries offer customized private banking and wealth management services through TD Wealth®, and vehicle financing and dealer commercial services through TD Auto Finance. TD Bank is headquartered in Cherry Hill, N.J.
The Wells Fargo Foundation is a private foundation that is funded by Wells Fargo & Company. In the communities we serve, we focus our social impact on building a sustainable, inclusive future for all by supporting housing affordability, small business growth, financial health, and a low carbon economy. News, insights, and perspectives from Wells Fargo are available at Wells Fargo Stories. Additional information may be found at www.wellsfargo.com | Twitter: @WellsFargo