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Thread: 35% of American Adults Have Debt 'In Collections'

  1. #1

    35% of American Adults Have Debt 'In Collections'

    http://news.slashdot.org/story/14/07...in-collections

    According to a new study by the Urban Institute, 35% of U.S. adults with a credit history (91% of the adult population of the U.S.) have debt "in collections" — a status generally not acquired until payments are at least 180 days past due. Debt problems seem to be worse in the South, with states hovering in the 40%+ range, while the Northeast has it better, at less than 30%. The study's authors claim their findings actually underrepresent low-income consumers, because "adults without a credit file are more likely to be financially disadvantaged."

    Oddly, only 5% of adults have debt 30-180 days past due. This latter fact is partially accounted for by the fact that a broader range of debt can enter "in collections" status than "past due" status (e.g. parking tickets)... But also perhaps demonstrates that as one falls far enough along the debt spiral, escape becomes impossible. Particularly in the case of high-interest debt such as credit cards — the issuers of which cluster in states such as South Dakota, following a 1978 Supreme Court ruling that found that states' usury laws did not apply to banks headquartered in other states.

    Even taking into account the folks who lost a parking ticket under their passenger seat, 35% is a pretty shocking number. Anyone have other theories why this number is so much higher than the 5% of people who are just "late"? How about some napkin math on the debt spiral?
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    Oh, but the economy is juuuuuuuuuust fine! Now, wheres Zippy?
    1776 > 1984

    The FAILURE of the United States Government to operate and maintain an
    Honest Money System , which frees the ordinary man from the clutches of the money manipulators, is the single largest contributing factor to the World's current Economic Crisis.

    The Elimination of Privacy is the Architecture of Genocide

    Belief, Money, and Violence are the three ways all people are controlled

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  3. #2
    Using this as an indication of the economy is just plain dumb. Any reasonable person could conclude that if 35% of Americans had bad debts that were significant, every bank in the U.S. would have gone under.

    I'm not surprised the number is so high. Once in collections, and assuming its an amount that's not worth taking to court, there is no reason to pay it off. It'll fall off in 7 years. Paying it will only give it new life on your credit report, since the account will be updated. Thus, many of the 35% of Americans are being rational.

    The article practically debunks its usefulness by itself. 5% of Americans have something 30-180 days past due. Since accounts stay on a report for 7 years, the fact that 35% of Americans have an account in collections is perfectly reasonable.

    Currently, only about 3.3% of total loans and leases on bank balance sheets are delinquent or charged-off. This is a much better indication of economic health, IMO.

  4. #3
    This latter fact is partially accounted for by the fact that a broader range of debt can enter "in collections" status than "past due" status (e.g. parking tickets)...
    Sometimes the penalty for unpaid parking tickets is death, like that unarmed man that was gunned down while backing out of his own driveway.
    "I shall bring justice to Westeros. Every man shall reap what he has sown, from the highest lord to the lowest gutter rat. They have made my kingdom bleed, and I do not forget that."
    -Stannis Baratheon

  5. #4
    I'm surprised it's not 50%

  6. #5
    35% is actually the normal figure.
    http://hosted.ap.org/dynamic/stories...07-29-00-12-33

    Yet roughly the same percentage of people are still getting reported for unpaid bills, according to the Urban Institute study performed in conjunction with researchers from the Consumer Credit Research Institute. Their figures nearly match the 36.5 percent of people in collections reported by a 2004 Federal Reserve analysis.
    And many don't even know they have been listed as being in collections. Say you quit a gym in a dispute and didn't cancel your membership. They keep billing you for it. You say I aren't even using it so why should I pay it and ignore it. They place it into collections. Or some other disputed bill you decide you don't owe or stop paying on for some reason. And as Jordan says, they can't do anything after seven years.
    Last edited by Zippyjuan; 07-30-2014 at 01:48 PM.

  7. #6
    Valid points, but what about Debts that can not be discharged with either Bankruptcy or 7 Years of Inactivity? Medical Debts and Student Loans. Both of those types of debt probably contribute to the problem. A person with a huge Medical Debt may not have money left over to, as mentioned, afford a Gym Membership.

    Another way to look at this is from the perspective "Is Atlas Shrugging"?
    1776 > 1984

    The FAILURE of the United States Government to operate and maintain an
    Honest Money System , which frees the ordinary man from the clutches of the money manipulators, is the single largest contributing factor to the World's current Economic Crisis.

    The Elimination of Privacy is the Architecture of Genocide

    Belief, Money, and Violence are the three ways all people are controlled

    Quote Originally Posted by Zippyjuan View Post
    Our central bank is not privately owned.

  8. #7
    Quote Originally Posted by Jordan View Post
    Using this as an indication of the economy is just plain dumb. Any reasonable person could conclude that if 35% of Americans had bad debts that were significant, every bank in the U.S. would have gone under.

    I'm not surprised the number is so high. Once in collections, and assuming its an amount that's not worth taking to court, there is no reason to pay it off. It'll fall off in 7 years. Paying it will only give it new life on your credit report, since the account will be updated. Thus, many of the 35% of Americans are being rational.

    The article practically debunks its usefulness by itself. 5% of Americans have something 30-180 days past due. Since accounts stay on a report for 7 years, the fact that 35% of Americans have an account in collections is perfectly reasonable.

    Currently, only about 3.3% of total loans and leases on bank balance sheets are delinquent or charged-off. This is a much better indication of economic health, IMO.
    Well , best I can tell , over 1/3 of it is utilities and student loans . Bad sign if people are having trouble with utilities , but relevant considering the poor work force participation rate .

  9. #8
    I might have an outstanding parking ticket. Should I report to a federal prison?

    Honestly, this doesn't seem like that big of a deal to me. I know people that used debt to make $1,000s on Bitcoin. It's not my style but more power to them.
    Lifetime member of more than 1 national gun organization and the New Hampshire Liberty Alliance. Part of Young Americans for Liberty and Campaign for Liberty. Free State Project participant and multi-year Free Talk Live AMPlifier.



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