Law Office of Allan E. Dunaway, PLC

Delinquent debt plagues over a 3rd of Americans

Kentucky residents who are struggling to pay their debts may take comfort in the realization that they are not alone. A recent study by the Urban Institute analyzed credit information for approximately 7 million Americans and discovered that more than one-third of them have had debts placed in collections. Typically, a debt is moved to collections and its account closed if it is more than 180 days past the due date. At that point, the debt will usually affect the person's credit report negatively.

The debts that were analyzed included past due child support, parking tickets, utility payments, membership dues, medical bills and other unsecured debt. Payday loans were not included in the study. The average amount owed by those with debts in collections is a bit more than $5,000. Some individuals may not be aware of past due debts, especially people who have unpaid medical bills that they incorrectly believed would be covered by their health insurance.

The state with the highest percentage of consumers with past due debts is Nevada, where 46.9 percent of individuals who have a credit file have a debt in collections. Out of 13 states where more than 40 percent of consumers with credit files have delinquent debts, most are located in the Southern United States. Kentucky is one of those states listed in the top 13.

When debts become too much to handle, a bankruptcy attorney may be able to help. Consumers who meet eligibility requirements could try filing for Chapter 7 protection and discharge many unsecured debts. Alternatively, consumers who have a steady income may be able to take advantage of Chapter 13 bankruptcy to discharge some debts and set up a repayment plan for the remaining debts.

Source: Detroit Free Press, "A third of Americans delinquent on debt, study says", Hadley Malcolm , July 29, 2014

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