WASHINGTON (AP) A study by the Urban Institute shows that more than 35 percent of Americans have debts and unpaid bills that have been reported to collection agencies.
These consumers fall behind on credit cards or hospital bills. Their mortgages, auto loans or student debt pile up, unpaid. Even past-due gym membership fees or cellphone contracts can end up with a collection agency, potentially hurting credit scores and job prospects.
The study by the Washington-based think tank released Tuesday points to a disturbing trend: The share of Americans in collections has remained relatively constant, even as the country as a whole has whittled down the size of its credit card debt since the official end of the Great Recession in the middle of 2009.
The delinquent debt is overwhelmingly concentrated in Southern and Western states. Texas cities have a large share of their populations being reported to collection agencies.
(Dallas, 44.3 percent; El Paso, 44.4 percent; Houston, 43.7 percent; McAllen, 51.7 percent; and San Antonio, 44.5 percent)
Eric Salazar is the Texas and Florida manager for the credit counseling agency GreenPath. He sees a few major factors appear to be driving the delinquencies.
First, many of these workers have low-paying jobs in construction and services, in addition to minimal education on their finances. Secondly, these states are home to retirees who live on fixed incomes and may struggle to pay medical bills.
Other cities have populations that have largely managed to repay their bills on time. Just 20.1 percent of Minneapolis residents have debts in collection. Boston, Honolulu and San Jose, California, are similarly low.