These necessary helps for millions of families can end. What will happen next?

By Adam Edelman - NBC News

In response to the impact of COVID-19, the federal government has allowed millions of Americans to

defer payments on mortgages, rents, student loans, and utility bills

.

But as more and more people get vaccinated and the country sees a return to normalcy on the horizon, payments on trillions of dollars of debt

could resume soon

.

Even if the debtors were still out of work or in financial difficulties due to the economic crisis that has caused the pandemic. 

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Experts in personal finance and regulation, as well as Democratic lawmakers, warn that the next debt crisis will be catastrophic for many people and that it could become a

huge profit opportunity for financial institutions that exploit situations of this type

, such as debt collectors and the so-called payday lenders [who grant small loans and are usually paid in a single payment as soon as the debtor has the possibility to collect]. 

These are all industries regulated by the Consumer Financial Protection Bureau (CFPB) that President Joe Biden is trying to revitalize after he ran

out of leeway

under former President Donald Trump.

"As the impact of the pandemic is reduced, there is a lot of over-indebtedness: deferred rents, deferred mortgages, deferred student loans. Basically, we are living in a suspended reality until the pandemic ends," explains the professor of the Law School of Harvard Howell Jackson, specialist in financial regulation and consumer protection, who was a visiting expert at the CFPB from 2013 to 2015.

[These taxpayers must pay their taxes before April 15 despite the IRS extension]

"At some point there will be an

extraordinary number of people who are very vulnerable to debt

, and we will have significant debt collection problems," he says.

"We have already seen problems during the pandemic with payday lenders," he also says. 

Last month, Biden extended both the foreclosure moratorium and a program that allows mortgage payments to be suspended until the end of June.

Earlier, in one of his first steps as president, Biden extended the possibilities of suspending payments on federal student loans until the end of September, something that interested about

40 million borrowers

.

Many utility companies have also voluntarily allowed consumers to stop paying for electricity and gas bills during the economic crisis.

A new round of checks for $ 1,400 begins to be sent this Wednesday

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Consumer advocates have praised those measures, as well as those of the American Rescue Plan that provide direct financial relief to these individuals.

But for many, these policies are not enough, and even if Biden extends their validity periods even further, at some point the aid will run out.

When this happens, the

total amount spent on debt repayment can be staggering

, warn Jackson and other experts.

"These periods of forbearance are going to end. And when they do, there may be millions of families who can't get back on paying their mortgages or car, credit card payments, student loans, and who could risk losing their money. houses, their cars, keep their wages and bank accounts seized, and it will cost them to put food on the table and take care of their families, "says David Silberman, who was associate director of research, markets and regulation of the CFPB since which was founded [in 2011] until February 2020.

In fact, at the end of February, almost a year after the pandemic,

one in five tenants had accumulated behind on their rent payments

and more than 10 million people were behind on their mortgage payments.

In addition, a "flood" of people with student loans granted soon could fail to meet them after the deferral period of those payments closes, warned lawmakers Rohit Chopra, Biden's nominee to lead the CFPB, during his confirmation hearing this month.

The price of racial inequality

People belonging to minority communities face the most severe economic difficulties in all sectors, and will be the hardest hit by the next wave of defaults.

According to the latest Census survey,

18% of Hispanic borrowers

, 17% of black borrowers, 18% of Asian borrowers, and 7.3% of white borrowers are not up to date with their mortgage payments. .

According to that data, 33% of black tenants were late in paying rent, along with

20% of Hispanic tenants

, 16% of Asian tenants and 13% of white tenants.

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The same is true for people who obtained student loans, as those who are from minorities are more likely to have larger loans, as well as to face a salary cap when they finally enter the job market.

According to Chopra, this is a "double whammy." 

As payment deadlines expire, employed people who don't have enough cash will likely

have to rely on payday lenders

, experts warn.

And the unemployed and underpaid could be completely exposed to unscrupulous debt collectors.

What can CFPB, created by Obama and dismantled by Trump, do

Democratic experts and lawmakers, including Massachusetts Sen. Elizabeth Warren - who helped create CFPB during the Barack Obama administration have said multiple times that this agency has unique resources to help struggling borrowers deal with those inconveniences.

But that can only happen if Biden can

regain his effectiveness

. 

"All of that reflects why we have to make sure as quickly as possible that this agency is working as it did [under the Obama Administration]," Senate Banking Committee Chairman Sherrod Brown, D-Ohio, said in an interview.

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The agency can help enforce regulations in the payday loan industry, many of which were eliminated during Trump's tenure, as well as monitor aggressive debt collection practices,

something that did not happen often. with Trump

.

While the agency cannot avoid debt collection or payday loans, it can significantly reduce the excesses of those practices by ensuring that existing rules are vigorously and fairly enforced and by writing new rules. 

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These rules regulate what type of contact collectors can establish with consumers (and how often), as well as

the level of pressure they can exert on them

, requiring that collectors be honest about the credits they have granted and how collectors can report defaults.

Howell Jackson states that many debts also have statutes of limitation and are exhausted after a certain period of time.

"It is essential to make sure that consumers know that they have rights in this matter," he explains.

"There are a lot of real protections in the debt collection arena," he

adds.

Silberman, who worked at CFPB for nearly a decade, adds that this agency

can ensure that consumers are treated fairly

. 

"It does not necessarily mean that ultimately they will not suffer adverse consequences," he said, "in the end, the federal government will have to decide whether and how it can provide further assistance and relief.

But the agency, if it is strong, can guarantee fair and legal treatment for some of our most vulnerable consumers. "