A new Urban Institute study has determined that, led by residents of the South, 35 percent of all Americans have some kind of debt in collections.
The organization, which examined the credit files of 7 million consumers, determined that the estimated 77 million borrowers with debt in collections owe creditors $5,200 on average. At 70 percent, mortgages account for the bulk of the debt; but credit cards, utility bills, medical debt, child support, parking tickets, and membership fees also contribute. Because the findings were culled from credit files, lower-income Americans were underrepresented in the study; and alternative forms of debt that they often use, including payday loans, were excluded as well.
Urban Institute researchers identified Nevada as having the greatest share of residents in the red, at 46.9 percent; and Hawaii as having the highest average debt, at $83,810. According to the report, many Americans with debt in collections do not even know it -- especially pertaining to medical debt -- and may have otherwise good credit.