A new quarterly report by the CFPB documents changes over time in how consumers have used debt relief options for unsecured debt. The report, which examines recent trends in debt settlement and credit counseling, was released Friday.
Utilizing a nationally representative sample of approximately 5 million de-identified credit records maintained by one of the three nationwide consumer reporting agencies, the report shows that nearly one in 13 consumers with credit records had at least one account reported by the creditor as settled or with payments managed by a credit counseling agency from 2007 through 2019, according to the CFPB.
The report also indicates debt settlements rose dramatically during the Great Recession to a peak of $11.4 billion, and more than half of the settlements occurred within a year of the account first becoming delinquent. Additionally, debt settlement and credit counseling became less common after the recession, but recent settlements have been on the rise following changes in delinquencies and credit tightness, according to the report.
The agency says that the trends may repeat in future economic downturns, and its work builds off other recent foundational work it has undertaken 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 accessed on the CFPB website.