Consumer financial-hardship agreements slow but remain high

FILE - In this Oct. 1, 2020 file photo, a woman walks past a personal finance loan office in Franklin, Tenn. According to information released Tuesday, Jan. 26, 2021, credit reporting agency TransUnion has found that nearly 3% of common consumer debts were in financial-hardship status at the end of 2020, illustrating that many Americans are struggling to get by financially as the pandemic wears on. (AP Photo/Mark Humphrey, File) (Copyright 2020 The Associated Press. All rights reserved)

Credit reporting agency TransUnion has found that nearly 3% of common consumer debts were in financial-hardship status at the end of 2020, illustrating that many Americans are struggling to get by financially as the pandemic wears on.

While the latest number is down from a peak of almost 5% in spring, it's still far above the norm.

Overall, the hardship agreements — which can put a pause on payments or provide consumers other relief — hit their peak in May at 4.77%. In February, just before massive pandemic-related closures and layoffs hit, the measure was at 1.71%.

TransUnion looked at auto, credit card, mortgage and unsecured personal loan products. It found that 2.87% were in a financial hardship agreement as of the end of December, according to information released Tuesday.

The report did not look at student loans.

TransUnion found that 5.36% of mortgages were in hardship status in December, down from highs of over 7% in the spring, According to the year-end data, 2.93% of auto loans were in such agreements, 2.42% of credit cards and 3.36% of personal loans.

Furthermore, TransUnion found that consumers had varying preferences of how they'd like to resume payments. About 25% wanted to resume regular payments and extend the length of the loan; 19% of consumers wanted to extend the accommodation; and 17% preferred to create a repayment plan to catch up while making larger payments.

Typically the length of a hardship agreement and plans to resume payments are established by the lender based on a consumer's needs.