29% of Adults Have Debt in Collections, Report Finds

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An analysis by the Urban Institute shows a disproportionate amount of debt in collections is held by communities of color and residents of southern states.

Nearly one in three adults with credit records have some form of debt in collections, and the share of Americans with debt in collections is 60% higher in communities of color than in majority-white communities, the Urban Institute’s Debt in America interactive map shows. 

The Urban League’s analysis of Americans’ total debt, including medical, student loans, credit card and auto, found that 24% of those living in predominantly white communities have debt in collections compared to 39% of those living in communities of color. 

The share of residents with medical debt in collections was 17% in communities of color compared to 13% in majority-white communities. The research also found white people who held student loans had 9% of their student loan debt in default while persons of color had 14% in default. 

When analyzed by region, residents of southern states carried the highest amount of total debt in collections. The top five states with debt in collections were Louisiana (40.9%), Texas (40.7%), South Carolina (40.2%), West Virginia (40%) and Mississippi (38.3%). Moreover, among the 100 counties with the highest share of adults with a credit file with medical debt in collections (at least 34.8%), nearly all are located in the South.

Americans’ debt woes not only impact individuals and families but also local economies and governments. For example, a recent report by the National Association of Realtors found that debt hindered potential homebuyers’ ability to save for a downpayment by a median of three years and came primarily from student loan debt. 

The Urban Institute reviewed more than five million records in December 2020 from a random sample of de-identified consumer records from a major credit bureau. The credit bureau data did not include information about race. The review also incorporated estimates from summary tables of the U.S. Census Bureau’s American Community Survey (ACS).

See here to view the map and its findings.

Brent Woodie is an associate editor at Route Fifty.

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