It is incredible to think that one in three of all Americans are faced with debt in collection.
The other day a caller said “I used a document preparer or bankruptcy petition preparer. Certainly they have obligations to keep my social security number confidential?” Unfortunately I had to say “Oh how wrong you are.”
It is incredible to think that one in three of all Americans are faced with debt that is currently in collection. According to a study by the Urban Institute:
“Roughly 77 million Americans, or 35 percent of adults with a credit file, have a report of debt in collections. These adults owe an average of $5,178 (median $1,349). Debt collection involves a non-mortgage bill—such as a credit card balance, medical or utility bill—that is more than 180 days past due and has been placed in collections. 5.3 percent of people with a credit file have a report of past due debt, indicating they are between 30 and 180 days late on a non-mortgage payment. Both debt in collections and debt past due are concentrated in the South.”
37.9% of the debts collected are health related debts
Think about the information you are giving this stranger: all your financial information, your children’s names, bank accounts and your social security number. You do this without the slightest guarantee that the information will be kept safe.
According to the study 35.1% of people with credit records had been reported to collections for debt that averaged $5,178, based on September 2013 records. The Association of Credit and Collection Professionals reports that healthcare related bills account for 37.9% of the debts collected. Student loan debt represents another 25.2% and credit card debt make up 10.1%. Other collections are monies owed to the government, retailers, telecoms and utilities.
MUSINGS FROM DIANE:
Even though I spend most of my day in the world of bankruptcy it is still incredible to think 35 percent of every American adult has a debt in collections. There is a disconnect about the proper use of credit and societal expectation that we must have the latest cell phone, designer jeans or the largest house. Somewhere we lost how to live within our means.
Now don’t get me wrong – I completely understand those who are struggling to feed their family and keep a dependable vehicle so they can get to work. I know that most of my clients faced situations that were not in their control – loss of a job, medical problems or divorce. Bankruptcy is intended to help these folks get a fresh start in life. I am very proud of my clients because they worked very hard, but had file bankruptcy because there was no other choice.
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