More than One in Four Consumers Have a Debt in Collection with a Debt Collector
7/18/19 The Consumer Financial Protection Bureau (CFPB) just released a report that found that more than one in four consumers with a credit report have at least one debt in collection by third-party debt collectors. The report covers 2004 to 2018 from approximately 5 million credit records maintained by one of the three nationwide credit reporting companies.
Close to 900 third-party debt collectors furnished collection information, including account balance, payment history and status of the account.
Almost 60 percent are medical debts
The study also found that more than three out of four third-party collections are for non-financial debt – such as medical debt.
Almost 20 percent are for phone or utility bills
20 percent are for telecommunications or utilities debt. Positive payment information is generally not furnished for medical or telecommunications debt.
Approximately 9,330 debt collectors and debt buyers in the U.S.
Banks and other original creditors may collect their own debts or hire third-party debt collectors. In some instances, the original creditors may sell the debts to debt buyers. The buyers may try to collect on these debts, or hire other third-party debt collectors.
Are we teaching our children wise financial choices? The answer is ‘no’ if we feel it necessary to buy the latest cell phone or clothing. Or “need” to drive the newest vehicle or live in the fanciest house. No, we don’t “need” any of these items, instead we should strive to live within our means and plan for the future. This may seem to be weird for a bankruptcy attorney to say, because I make my living from people who are in financial distress.
What you may not understand is that most of my clients were making great financial decisions, but life happened. They lost their good paying job, they had disastrous medical expenses or they were faced with a divorce or failing business. Even someone with the best financial plan cannot survive these unexpected expenses.
Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.
*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*
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