A study has revealed that over a third of all Americans, at 35.1 percent, have debts and unpaid bills under their names.
On average, the debts of these individuals are $5,178, with a median of $1,349. The debts involve non-mortage bills, such as balances on an individual's credit cards, medical bills, or utility bills, that are over 180 days past their due date and have been forwarded to collections agencies.
The study by the Urban Institute, entitled "Delinquent Debt in America," brings to light the prevalence of delinquency in the country, which damages credit scores and job application success rates.
"Roughly, every third person you pass on the street is going to have debt in collections," said Urban Institute senior fellow Caroline Ratcliffe. "It can tip employers' hiring decisions, or whether or not you get that apartment."
According to information from the American Bankers Association, credit card debts have reached their lowest levels in over a decade, with Americans paying off their balances in increasing amounts per month. Only 2.44 percent of all credit card accounts are past their due date by more than 30 days, compared to the 15-year average which stands at 3.82 percent.
However, the study points out a rather unsettling trend: that the people getting reported to collections agencies for unpaid bills are roughly the same percentage, as the current percentage comes close to the 2004 Federal Reserve figure of 36.5 percent.
In addition, the study reveals that much of the delinquencies are concentrated in the states in the South and West, with Texas cities having a big share of their residents being forwarded to collections agencies. McAllen is at the top of the list with 51.7 percent of its residents, followed by San Antonio at 44.5 percent and El Paso at 44.4 percent.
On the other hand, cities that have the lowest percentages of people with debt in collections is headlined by Minneapolis, with only 20.1 percent. Other cities with low percentages include Honolulu, Boston, and San Jose, California.
The study also reveals that almost half of the residents of Las Vegas, 47 percent, have debt in collections, most probably due to the housing bust that started the Great Recession in 2009.
According to Ratcliffe, stagnant incomes are a defining factor on why certain parts of the United States are finding it difficult to repay their debts and obligations.
The percentage of delinquent Americans is "pretty disheartening," said Economics Policy Institute research and policy director Josh Bivens.
"This is yet another really bad legacy of the Great Recession that we're just nowhere near climbing all the way out of," Bivens added.
