Even if nothing seems amiss, chances are that you know people who are having trouble paying their bills. According to a new report from the Urban Institute, an alarming number of Americans (35%) have debt in collections. Unpaid bills typically end up in collections 180 days after their due date. The Urban Institute, which analyzed the credit files of seven million Americans, said this high percentage of unpaid bills is actually understated because the researchers didn’t have access to the nine percent of Americans (22 million), primarily poor, who aren’t tracked by TransUnion and the other credit bureaus. These people may be turning to payday loans and pawn shops for cash. The typical amount of money that people in serious arrears on their unpaid bills owe is $5,178. The analysts spotted uncollected debt ranging from $25 to more than $125,000. The debt can come from credit card bills, medical and utility bills. Americans who are experiencing difficulty with seriously delinquent bills are located in the South. About 40% of Southerners have debt that ended up in collection. New England residents (25%) had the lowest percentage of seriously past-due bills.
Among the 50 states, Nevada, which was hard hit by the housing crisis, has the greatest percentage of residents (47%) with debt in collection. The states with the least number of people in trouble with debt collection (under 20%) are Minnesota, North Dakota and South Dakota. What’s scary about these statistics is that some people might not even know that any of their bills are seriously past due. Some people, for instance, might believe that an insurer might have paid an outstanding medical bill. Warding off that nightmare scenario is an excellent reason why consumers should regularly check their credit report from the three major credit bureaus.