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1 in 3 Americans is dogged by debt collections

By Quentin Fottrell, MarketWatch
July 30, 2014

Americans are taking a hit on their credit scores by ignoring overdue debt.

One in three adults have a debt in collections reported in their credit files, according to a new report by the Urban Institute, a nonprofit organization that focuses on social and economic policy. And more than 77 million Americans owe an average of $5,200. Debt in collections refers to a debt that is 180 days past due and includes a credit card balance, child-support obligation, medical or utility bill, parking ticket and overdue membership fees, but excludes mortgage-related debt.

“This delinquent debt can harm credit scores and that can restrict access to credit and increase the cost of credit and insurance and tip employer decisions,” says Caroline Ratcliffe, a senior fellow at the Urban Institute.

Credit files give a more detailed picture of a person’s debt obligations than a credit report. What’s more, the debt can remain in a person’s credit file for seven years, she says, and many consumers may not know they are delinquent and only become aware of collections debt when they review their credit report.

So why don’t people take action? They may be embarrassed, believe that financial counseling costs too much or will damage their credit report, says Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling. Counseling through an NFCC member agency is either free or low cost, she says.


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meekandmild's picture

Collection by 3rd party is Fraud

A volunteer, stranger, or intermeddler is "one who thrusts himself into a situation on his own initiative and not one who becomes a party to a transaction upon the urgent petition of a person who is vitally interested, and whose rights would be sacrificed did he no respond to the importunate appeal ."Laffranchini, 39 Nev. 48, 153 P. at 252.

Parties may be considered volunteers if, in making a payment, they have no interest of their own to protect, they act without any obligation, legal or moral, and they act without being requested to do soby the person liable on the original obligation. Henningsen v. United States Fidelity Guar. Co., 208 U.S. 404, 411 (1908); Smith v. State Sav. & Loan Ass'n, 175 Cal. App. 3d 1092, 1098, 223 Cal. Rptr. 298, 301 (1986); Norfolk & Dedham Fire Ins. Co. v. Aetna Casualty & Surety Co., 132 Vt. 341, 344, 318 A.2d 659, 661 (1974).

exactly. I always explain this to agencies on the phone...

Ask what state they are in. Explain interstate wire fraud. Ask their name. They will not call back.

And you can mail them this letter:

Don't feed the pandas. Ever.

deacon's picture

Chris D.

We sent that letter in,had to be signed,so what they did was,send a sheriff
out with the paper work,which stated what court,what judge,how much was due,disregarded the letter,and never said when the court date was,we got a default judgement against us for failure to appear.

If we deny truth before your very eyes,then the rest of what we have to say,is of little consequence

deacon's picture

Here in my neck of the woods

them collection agents are lawyers
With our misfortune,we accumulated almost 60 grand of medical bills,with more following each month,We have a hard time keeping up with daily expenses,and now get calls and letters from lawyers wanting past due balances.
With that said,I swear that them lawyers have a judge sitting next to them,just to sign them letters to be sent out to harass.
Let me be clear,it is not like we haven't been trying to keep up,we were hit hard with medical expenses.I lost my job making good money at GM,the kids were slapped,and now another needs constant meds just to live.
We even got served court papers from a lawyers group,with NO court date,and were not there in court,so we lost by default,not once,but twice already!!
I do not tell anyone this for sympathy,but hopefully,to open some eyes as to how it works,or doesn't
For myself,2 auto accidents (not my own fault) the Ins company denied claims,so I was stuck paying with what should have been their responsibility,as I had ins ,But it all goes to a lawyers group,and they seem to have the judges ear,and they use fraud and deception

If we deny truth before your very eyes,then the rest of what we have to say,is of little consequence