As if the lingering recession weren’t enough bad news, three new surveys show Americans still struggle with serious debt – and debt collectors.
CareOne Service’s first “State of Debt Ranking” report, which the debt relief company released in early February, shows that the average American debt is more than $10,000.
“In the last few years, we have seen financial necessity cause more people to turn to credit cards to pay for daily expenses such as groceries, gas and utilities,” says CareOne executive vice president Jenny Realo, who also explained there’s a bright side: “But a growing number of people are realizing that their debt is a burden and seeking solutions to get their finances under control, pay down their debt, and boost their savings.”
The report also ranked each state based on average consumer debt, number of creditors, and credit score. Despite its struggling economy, California fared best, with an average consumer debt of $12,801. The northeast is home to the greatest amount of debt, with Maine ($19,454), Rhode Island ($20,130), and Delaware ($20,223) ranking last.
The same day, the “Slip-Sliding Away” survey was released by research nonprofit Public Agenda. It showed that only two out of every 10 Americans report no financial struggles, while four out of 10 struggle just to make ends meet, contributing to the seemingly high average American debt.
What’s worse, “those who are struggling a lot, and those who aren’t, live in dramatically different worlds,” according to the Public Agenda press release. “Half of those who say they’re struggling ‘a lot’ (52 percent) say they’ve had trouble paying the rent or mortgage since 2008, compared with only 4 percent of the non-struggling. More than one-third have lost their job in the past two years, compared with 9 percent of the non-struggling.”
To make matters worse, a third report, by Consumers Union, shows that the law isn’t strong enough to protect debtors from debt collection abuse at a time when lawsuits against debtors are on the rise. (For example, “Encore Capital Group, the largest publicly-traded debt buyer in the country by asset size, filed 245,000 lawsuits in 2009,” the study found. “Half of its $487.8 million in gross collections came from legal actions – a 22.4% increase in revenue from the previous fiscal year.”)
“The debt collection system is in dire need of reform,” said Gail Hillebrand, director of Consumers Union’s Defend Your Dollars campaign, in a press release. “Current law fails to address rampant debt collection abuses and leaves consumers vulnerable to being harassed for debt that has been paid off or that they don’t even owe.”
Of course, while debt collection abuse may be on the rise, it’s certainly nothing new in this economy. We’ve written about it regularly over the past year. So, if you’re struggling with debt or considering a debt relief agency, be sure to read these stories:
- Abused by a Debt Collector? Get a Free Lawyer
- Ask Stacy: Zombie Debt Haunts Consumer
- Viewer Question: Can I Negotiate Debts Myself?