There's Profit in Debt

Wednesday, 30 Jul 2014 07:56 AM

By Elliot Jager

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With 1 in 20 Americans "past due" in their debt payments, U.S. banks have collected $30 billion annually in overdraft fees, The Huffington Post reported.

Over 4,000 debt collection agencies have recouped some $40 billion in debt raking in a percentage of the cut for themselves. The agencies employ about 450,000 workers.

Some 77 million Americans have a debt in collection, according to the Urban Institute, The Huffington Post reported. About half of those in debt owe more than $1,349. In Nevada, 47 percent of those with credit files are in debt collection. Debt in collections and debt that is past due are concentrated in the South. Collection efforts usually commence after being in arrears for 180 days.

The number of Americans who make too little money to have credit files altogether numbers 22 million.

On average, American are $15,000 in debt including on credit cards. Mortgage debt averages $154,365 while student loan debt is $33,607, according to The Huffington Post.

The problem is not necessarily frivolous spending. People are spending less on clothes and entrainment and more on basics, say analysts who examined discretionary spending at retail outlets. Increasing numbers of Americans are using their credit cards to buy basic staples including food, according to The Huffington Post.

The Urban Institute report concludes that, "In addition to creating difficulties today, delinquent debt can lower credit scores and result in serious future consequences. Credit scores are used to determine eligibility for jobs, access to rental housing and mortgages, insurance premiums, and access to (and the price of) credit in general."

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