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More than One in Four Consumers Have a Debt in Collection with a Debt Collector

debt collection7/18/19 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.

Read the full report.

MUSINGS FROM DIANE:

debt collection

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.

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