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1 in 3 Adults Have Defaulted On Debt

Poll QuestionWe’re becoming a country of delinquents.

More than a third of Americans have a debt in collections, a new study from the Urban Institute found.

About 77 million adults with a credit file owe an average of $5,178, although the amount per individual varies from $25 to more than $125,000.

The Urban Institute defines a debt in collections as a credit card balance or medical or utility bill that is more than 180 days past due and is in collections. Mortgage bills aren’t included.

The study found geographic concentrations of delinquent individuals. The South posted the highest number of collection debts, at about 40%; New England, the lowest, at 25%.

Among states, Nevada leads in debt collections. A whopping 47% have a reported debt in collection, although the study does note that Nevadans were hit hard by the housing crisis.

Washington, D.C., also tops 40%, as do the states of Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, New Mexico, North Carolina, South Carolina, Texas and West Virginia.

States with debt collection numbers on the low end are the Midwestern states of Minnesota, North Dakota and South Dakota.

But “low” is about 20%.

Oh, boy.

One interesting note the study makes is that people may not realize that they have debt in collections.

They only find out when they review their credit report, which is why it’s important to review your credit report once a year.

We’re assuming our financial-savvy Bankaholic readers are among the two-thirds of Americans without a debt in collection.

And we want to know: What do you think could change this delinquency trend?

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What do you think could lower the delinquency rate?
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