Deleveraging of the American Household - 8/13/14

Aug 13, 2014

There has been much talk in recent years about the deleveraging of the American household.  The notion is that the recession had a jarring effect on people’s perceptions of their own economic security, with rising insecurity translating into less debt accumulation and accelerated repayments.  That may be, but America still has a debt problem.  A recent study by the Urban Institute estimates that 1 in 3 adults with a credit history, or about 77 million people, have at least one account in collections.  The study examined non-mortgage debt, including auto loans, medical bills, credit card balances, child support payments and even parking tickets. 

The average amount owed is $5,200.  Nevada, the state hardest hit by the housing downturn and the Great Recession, has the highest percentage of residents with debt in collections – 47 percent. The average amount owed is also the highest in the nation at $7,200.  By contrast, North Dakota, which arguably is home to the nation’s strongest economy, has just 19 percent of residents in collections.  Among the 100 largest metropolitan areas in the nation, the Minneapolis region is associated with the lowest percentage of residents with debt in collections at 20 percent.  At 51 percent, McAllen, Texas has the highest percentage.