35% of U.S. Consumers Have Delinquent Debt

debt & foreclosure helpOn July 30, 2014 the Urban Institute released the results of its study, Delinquent Debt in America. The alarming numbers revealed that among adults who have a credit file:

  • 35% of U.S. consumers (77 million) have a debt or unpaid bill that has been sent to collections, and
  • 5% of U.S. consumers have a recent debt or bill that is more than 30 days late.

These numbers reflect nonmortgage debt only – credit cards, auto loans, student loans, and medical bills. The Urban Institute gleaned the information from 2013 data from one of the nationwide credit reporting agencies.

What Is a Debt Past Due?

Debt past due (or unpaid debts or bills) are those debts that creditors have reported to the credit reporting agencies as being more than 30 days late. Among those with debts past due, the average amount needed to become current is $2,258.

What Is a Debt in Collections?

The Urban Institute defines a “debt in collection” as one that has been charged off by a creditor (which generally means it’s more than 180 days delinquent). Some of these debts can be quite old since they remain on a credit report for seven years. The average total debt in collections per person is $5,178. The report noted that some people are likely unaware that they have old debts listed on their credit reports as charged off or in collection. (This underscores the importance of checking your credit report regularly and fixing outdated information or errors. To learn how, see Nolo’s Cleaning Up Your Credit Report.)

Actual Numbers of People in Debt Are Likely Even Higher

The percentage of those in debt is probably even higher than these figures because the statistics do not take into account:

  • adults who don’t have a credit file (these are low-income people who don’t have access to traditional credit, but often have other types of delinquent debts or loans outside the financial mainstream)
  • those who are behind in, or are struggling with, mortgage debt, and
  • people who owe money to friends or family.

Delinquent Debt by Region

The study looked at these statistics in various regions of the country. Check out the report’s map that records the concentration of Americans in debt across the nation.  The South had the largest percentage of residents in debt, but the study points out that you see more variances in the number of adults with delinquent debt as you look at smaller and smaller geographical areas (rather than large regions of the country).

Any Relief in the Future?

Not likely. That a large number of people in this country are struggling with debt is no surprise, although the actual percentage cited in the study is alarming. The reasons for this level of debt are many. Sure, some people could stand to control their spending a bit and live within their means. But more likely, for the vast majority of people with unpaid bills, merely tightening their belts will not solve their financial troubles.

Years of high levels of unemployment and underemployment, the housing bust, the shrinking middle class, the fact that wages have not quite kept pace with inflation, and the higher cost of college and graduate schools, are just a few of the issues facing us and our country. Unfortunately, these hard-to-solve problems mean that debt will be the reality for many residents of the U.S. for the foreseeable future.