WASHINGTON – The Consumer Financial Protection Bureau has released a report showing changes over time in how consumers have used debt relief options for unsecured debt.
The Bureau said it used its own Consumer Credit Panel (CCP), a nationally representative sample of approximately five million de-identified credit records maintained by one of the three nationwide consumer reporting agencies, to find nearly one-in-13 consumers with a credit record had at least one account reported by the creditor as settled or with payments managed by a credit counseling agency from 2007 through 2019.
The report also shows debt settlements rose dramatically during the Great Recession to a peak of $11.4 billion, with more than half of these settlements occurring within a year of the account first becoming delinquent.
“Debt settlement and credit counseling became less common after that recession, but recently settlements have been on the rise following changes in delinquencies and credit tightness,” the Bureau said.
‘May Repeat in Future’
In releasing its new report, the Bureau added, “These trends may repeat in future economic downturns. This work builds off other recent foundational work undertaken by the Bureau to promote market discussions highlighting developments in options for consumers who are no longer able to manage their unsecured debts.”
The full report can be found here.