Debts, Disasters, and Delinquencies: The Case for a Mandatory Force Majeure Provision in Consumer Credit Agreements, and for a Consumer Credit Insurance Fund

Abstract

This article addresses inequities in the apportionment of losses which arise when traditional consumer finance rules are applied to enforce consumer payment obligations which accrue during and after catastrophes. Disasters lead inevitably to job losses, to property destruction, and to inhibited access to homes and workplaces. In the wake of devastation, consumer fees and interest charges mount, and payment defaults increase. It is argued here that the resulting individual hardships and social distress could be mitigated by mandating the inclusion of force majeure provisions in consumer finance agreements and by creating a national consumer credit insurance fund.

Keywords: Consumer Movement, Mortgage Lender, Credit Card Issuer, Eviction, Hurricane

JEL Classification: D10, D11, D18, D19, G20, G21, G28, G29, H31, I31