Over 1 in 3 U.S. Adults Have a Delinquent Debt

A recent report from the Urban Institute using data from TransUnion indicates that close to 77 million Americans, or about 35% of adults with a credit file have a report of a debt in collections. That includes debt from credit card bills, child support, medical bills, utility bills, parking tickets or membership fees. A debt that is reported as in collections can remain on a person's credit report until the debt is seven years past due.  

The Urban Institute’s study showing 35% of people with a credit file have a debt in collections is consistent with a 2004 Federal Reserve study that indicated 36.5 percent of people with a credit report had a debt in collections reported in their file.  The Federal Reserve study was also based upon a credit bureau’s data, so therefore it is somewhat skewed by omitting about 9% of the adult population that does not have a credit report.  Those individuals without a credit file tend to be more likely to be financially disadvantaged low-income consumers.

A consumer may not realize that they have a debt in collections until they review their credit report. Which is a good reason alone, but coupled with spotting identity theft, that a person should review their credit report yearly. The amount of debt in collections varies greatly by person, from less than $25 to more than $125,000 with the average debt in collections equal to $5,178.

In addition to the 35% of adults with a credit file that shows a debt in collections nearly 12 million adults, or 5.3 percent of Americans with a credit file have a non-mortgage debt reported past due, and that they need to pay $2,258 on average to become current on that debt. The impact of these delinquent debts to a consumer can mean a lower credit scores that can result in serious future consequences. Credit scores are sometimes used to determine eligibility for jobs, access to rental housing and mortgages, insurance premiums, and access to and the price of obtaining credit in general. High levels of delinquent debt and its associated consequences can harm both families and the communities in which they live.

If you would like more details, please do not hesitate to call our office.  Our office has been successful in helping consumers with collection problems for over 22 years. If you have a debt or tax problem please contact me at (847) 705-9698 or thughes@lavellelaw.com and find out how we can help you.