As Montana reopens with mounting uncertainty, we see promising signs of recovery from COVID-19. But the hope for economic recovery locally and nationwide will be tempered as millions of Americans confront paying down record levels of unsecured debt. These American families and small business owners will need support to manage and restructure their debt payments going forward.
Montana’s Senator Steve Daines (R-Montana) and Oregon Senator Jeff Merkley (D-Oregon) are leading a bipartisan effort to provide federal support for credit counseling spanning two years. This support will enable millions of Americans with billions in unsecured debt to work with a credit counselor and evaluate debt management options.
American families that lost jobs or were furloughed, and small business owners dealing with massive revenue reductions face crushing credit card and medical expenses. Since mid-March, more than 40 million Americans, including more than 80,000 Montanans, are unemployed. These are our family and neighbors, many who own small businesses in our communities.
They now risk falling further behind on debts, additionally straining our already shaky economy. Consumers fortunate enough to receive temporary forbearance will face a harsh reality as programs end. No doubt, delinquent consumer debt will cause bankruptcies and foreclosures, flooding our courts and weakening our communities.
Our members are ready and willing to work with our clients and customers to restructure their debt — already we’ve been working overtime to enroll borrowers in forbearance and other relief programs. But many consumers hold credit card and other debt across multiple creditors and developing comprehensive solutions without expert advice is difficult. Confused and overwhelmed, these Americans could be vulnerable to scammers that bombard consumers with empty promises and threaten the important relationship between financial institutions and their customers.
Fortunately, Senator Daines and Merkley’s bill would provide critical resources to assist these struggling Americans. Their bill would help Americans avoid bankruptcy and restructure existing debt to affordably repay more billions of dollars in 2 years, while saving billions in concessions from their creditors.
Federal support for non-profit counseling was a tremendously successful response to the mortgage crisis. Non-profit counselors helped millions of homeowners avoid foreclosure and get safe and sustainable loan modifications. To respond to the unique challenges presented by the COVID crisis, non-profit credit counselors can help millions of American families and small businesses right-size their debt with sustainable lower payments to avoid bankruptcy and collections.
Montana can lead the country through our economic recovery by encouraging wider support of non-profit credit counseling, putting Montana families on a path of long-term financial health.
Cary Hegreberg is the President and CEO of the Montana Bankers Association. James Brown is the Executive Director of the Montana Independent Bankers.
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