Many Minnesota residents struggle with debt

Based on a study done by the Urban Institute, which looked at the credit histories of seven million people in the United States, over a third of people have debt in collections. Unpaid balances usually go to debt collections 180 days after payment is due, and this action also means that the debt has been reported to collection agencies and may be negatively impacting someone's credit rating. People without a credit history were not able to be included in the study nor were payday loans, so lower-income households may not be properly represented.

Those with debt in collections owe an average of approximately $5,200, which can be anything from unpaid credit cards to child support. Some of the unpaid debt may be due to individuals not being aware that they owed money, and an example of this is when someone thinks that an insurance company covered a medical bill but the patient was responsible for it.

The average debt owed by individuals with a credit history is around $54,000, but that number appears worse than it is because it includes mortgages. In some cases, home loans are considered good debt, and an individual with a large mortgage may be in a better situation than someone with a few thousand dollars of credit card debt.

Unpaid debt can prevent people from being able to get home loans or lines of credit, and when credit is available, it may require large down payments and high interest rates. Filing for bankruptcy may be able to help someone eliminate unsecured debt and begin rebuilding their credit, and an attorney could explain the process involved as well as assisting with a filing.

Source: Detroit Free Press, "A third of Americans delinquent on debt, study says", Hadley Malcolm , July 29, 2014

No Comments

Leave a comment
Comment Information

Prescott Pearson & Tande, PA
443 Old Highway 8 Northwest, Suite 208
New Brighton, MN 55112

Toll Free: 888-366-0827
Phone: 651-968-8096
Fax: 651-633-7562
New Brighton Law Office Map

map