Many consumers still have debt in collections
Much has been made lately about the state of the economy, how more people are back to work and unemployment claims are down. Despite this good news, it appears that the number of consumers with past due debt in collections is still a problem. According to a study by the Urban Institute, 35 percent of consumers have a debt that is in collections.
This is significant given that the nation’s economy is such that the Great Recession is seemingly a distant memory. Even though many states have passed laws increasing the minimum wage, many workers have not had significant wage raises until this time. As such, many people may still be digging themselves out from financial holes created during the recession.
Additionally, debt collectors see more of an opportunity to make money on unpaid accounts (since they were essentially worthless during the recession). The Urban Institute found that the collections industry employs 140,000 workers who collect $50 billion per year in delinquent accounts.
Nevertheless, not everyone has reaped the fruits of the improving economy, and collection accounts continue to be a tough issue for families to deal with; especially when they prevent them from moving past troubling debt. In these instances, it may be a good option to see if bankruptcy may lighten your load so that you can finally move on with life. This may be particularly important if you have a great deal of unsecured debt (i.e. medical expenses, credit card debt, second mortgages). A Chapter 7 bankruptcy, for example, may help in discharging such debt.