“Americans have a debt problem.
An estimated 1 in 3 adults with a credit history — or 77 million people — are so far behind on some of their debt payments that their account has been put “in collections.”
That’s a key finding from a new Urban Institute study.
It examined non-mortgage debt, including credit card bills, car loans, medical bills, child support payments and even parking tickets.
The debt in collections ranged from as little as $25 to a whopping $125,000. But the average amount owed was $5,200.
Geographically, no area of the country is untouched.
Among the states, Nevada had the highest percentage of residents with debt in collections — 47% – as well as the highest average amount owed – $7,198. That was helped in part by the Las Vegas metro area, where 49% of residents had debt in collections.
By contrast, North Dakota had the lowest percentage of residents with debt in collections at just 19%, while the District of Columbia had the lowest average dollar amount owed per person at $3,547.
At least with credit cards, debt won’t go into collections unless it’s more than 6 months past due. But time frames can differ from place to place when talking about debt like parking tickets and medical bills.
Once it is categorized as in collections, however, it can follow one of three courses, according to the Urban Institute report. The creditor can charge it off and sell it to a debt buyer, put the account into default, or seek to collect what’s owed through an in-house department or a third-party debt collector.
In any of those cases, however, the cost to the consumer is high and long-lasting…..”
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