Drowning In Debt: 35% Of Americans Have Debt That Is At Least 180 Days Past Due

Tyler Durden's picture

Submitted by Michael Snyder via The Economic Collapse blog,

More than a third of all Americans can’t pay their debts.  I don’t know about you, but to me that is a shocking figure.  As you will see below, 35 percent of the people living in this country have debt in collections.  When a debt is in  collections, it is at least 180 days past due.  And this is happening during the “economic recovery” that the mainstream media keeps touting, although the truth is that Barack Obama is going to be the only president in United States history to never have a single year when the economy grew by at least 3 percent.  But at least things are fairly stable for the moment, and if this many Americans are having trouble paying their bills right now, what are things going to look like when the economy becomes extremely unstable once again.

The 35 percent figure is a nugget that I discovered in a CNN article about Detroit that I was reading earlier today

And the city’s troubles have left a mark on the financial stability of its residents in a big way, according to a new report from the Urban Institute.

 

About 66% of residents have debt in collections — meaning more than 180 days past due — at a median amount of $1,847. Across the U.S., 35% of Americans have debt in collections.

It is hard to believe that 66 percent of the residents of one of our largest cities could have debt in collections, but without a doubt the city of Detroit is a complete and utter economic wasteland at this point.

But to me, the 35 percent figure for the nation as a whole is a much greater concern.

And much of the debt that is in collections is credit card debt.

In the immediate aftermath of the last financial crisis, many Americans started getting out of debt, and that was a very good thing.

Unfortunately, that trend has completely reversed itself over the past few years, and now credit card balances are rising at a pace that is quite alarming

Using data from the U.S. Census Bureau and the Federal Reserve, ValuePenguin found that the average credit card debt for households that carry a balance is a shocking $16,048 — a figure that has risen by 10% over the past three years. At the average variable credit card interest rate of 16.1%, this translates to nearly $2,600 in credit card interest alone. And many credit cards have interest rates much higher than the average.

 

Even scarier, consider that based on the average interest rate and a minimum payment of 1.5% of the balance, it would take nearly 14 years for the typical indebted household to pay off its existing credit card debt, at a staggering cost of more than $40,200. Keep in mind that this assumes no additional credit card debt is added to the tab along the way.

Those that have been there know exactly how it feels to be drowning in credit card debt.

You know, they don’t teach you about credit cards in high school or in college.  At least they didn’t in my day.  So once I got out into the “real world” and discovered the joy of instantly getting whatever I wanted with a credit card, I didn’t understand how painful it would be to pay that money back someday.

If you have credit card balances that are out of control, they can keep you up late into the night.  The worry and the fear can eat away at you like a cancer, and many people play a game of moving balances from one card to another in a desperate attempt to stay afloat.

Fortunately I learned my hard lessons at an early enough age to get things turned around.  Now I warn others about the danger of credit card debt through my writing, and my hope is that the things that I share on my websites are doing some good for others that may be struggling financially.

When you are deep in debt, it is exceedingly difficult to build up any wealth of your own.  This is one of the primary reasons why 69 percent of all Americans have less than $1,000 in savings today.

In essence, more than two-thirds of the country is living paycheck to paycheck, and that is a recipe for disaster when the next major economic downturn in the U.S. strikes.

Overall, household debt in America has now reached a grand total of 12.3 trillion dollars.  When you break that down, it comes to $38,557 for every man, woman and child in the entire nation.

So for a family of five, your share of that total would be $192,785.

And remember, that is just household debt.  That total does not include any form of business debt or any form of government debt.

We truly are a “buy now, pay later” society.  We were the wealthiest and most prosperous nation on the entire planet, and previous generations handed us the keys to the greatest economic machine in world history, but that wasn’t good enough for us.

We always had to have more, more, more – and now we have accumulated more debt than any society in the history of the globe.

It is inevitable that this giant debt bubble is going to burst.  Anyone with an ounce of common sense can see that.

What we experienced in 2008 was just a preview of the hard times that are coming.  The next recession is going to be even worse, and most economists are convinced that it will happen within the next four years no matter who is elected president in November.  The following comes from the Wall Street Journal via the Calculated Risk blog

Economists in The Wall Street Journal’s latest monthly survey of economists put the odds of the next downturn happening within the next four years at nearly 60%.

Just like the last time around, millions of those that are “living on the edge” financially will fall out of the middle class and into poverty when they lose their jobs.

Hopefully most of you that have been reading my work for an extended period of time have already been getting out of debt and have been building up a financial cushion.

Sadly, most of the country continues to act as if they are living in a pre-2008 world, and the economic wake up call that is coming is going to be incredibly painful for those that thought they could get away with being exceedingly reckless financially.

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Tallest Skil's picture

The worst part is that they're going to be rewarded for their idiocy, while people like us without debt and who could make proper payments on mortgages, et. al. will be shafted.

JRobby's picture

I think the banks will crush them. It's what they do. They have a certain ratio of OD victims they anticipate. I think this is getting out of hand now though.

Had to down vote you. Without unity, we all go down.

 

Theta_Burn's picture

@TS

That was Santelli's rant waaay back in the day, but what everyone missed was the banks tripping over each other to lend knowing full well the end result..

But it is different this time.. literally feeding 150 million people won't be a "snap"...

Loftie's picture

Too bad America is NEVER getting better. http://wp.me/p4OZ4v-3z

LowerSlowerDelaware_LSD's picture

"Across the U.S., 35% of Americans have debt in collections."

Sorry, but I call bullshit on that one.  One in three people six months behind in payments?  Maybe one in 20 but probably one in 50.  Of course all of the free shitters but that's only 20% or so for now.

sun tzu's picture

Haha you sucker. Most poor class people are poor due to bad financial decisions. That means they bought things they could not afford. Considering nearly half the country is on some sort of government assistance, the 35% number seems about right. 

Squid-puppets a-go-go's picture

dude, the RICH buy things they cant afford, too, and are generally in higher proportional debt to earnings than are the poor / middle. Investors borrow money to buy investments. Forex traders leverage 500 to 1 in some cases . pricks never pay their utility bills until just shy of disconnection, even though its a palty amount compared to their earnings. It is the projection of wealth that keeps them swimming in the social circles that they hope will lead them to real wealth. 

To notparticipate in this might be mathematically wise but you get socially excluded coz everyone thinks yer a bummer and a tight arse.

they wil know otherwise after the crash, but in the meantime....  but go on, be judgemental if it makes you feel superior

PT's picture

Actually, when I read the headline all I could think of was Corporations who insist on paying their contractors six months late as a matter of policy.

Déjà view's picture

All by design...

2/3 of electorate are debtors...1/3 savers...which party will they vote for?

Stick a fork in it!

Blano's picture

I might call BS too. 

I have debt in collection, but it's just a $240 bullshit charge from my old apartment complex which I will not pay. 

No big deal. I'm sure there are plenty others like me. 

Stuck on Zero's picture

Let me add a few details:

66% of Americans have medical bills due over 180 days.  These poor Americans went to the doctor because of a headache or sliver and ended up owing $95K for five minutes with Doctor and a few blood tests they didn't want. Now they receive piles of unpaid bill notices for things they thought were covered under their health plan. Been there, done that.

willwork4food's picture

Pay them $20/month and tell them to scratch it.  They can't do a damn thing except report you are a "slow payer". Perfectly legal.

TxExPat's picture

Don't go to 180 days, but I have learned NEVER pay a medical Bill on the 1st pass.  (So I'm always 30 days late).

1st Bill is usually of the form "Procedure Preformed, please pay us $700".

2nd Bill usually reads "Oh you had insurance, because of that, the negotiated rate was $250, and your insurance paid 80%, send $50.

 

If I pay the 1st bill for $700, I generally have to "ask" to get the extra $650 back, and can expect to wait a while before I see it.

I think of the 1st bill as "shaking the money tree to see if any money falls out, if they pay it, and don't realize the game, we keep it"

On one hand you feel like a slow pay dead beat, on the other hand, the game is rigged.

 

philipat's picture

Hey Loftie, previously known as mofio then santafe then Aristotle of Greece then Gargoyle then bleu then oops then lance-a-lot and others. Lance-a-lot got banned very quickly so time to re-use another old persona (non grata)?

You are a serial spammer and a serial pain in the ass. Might I politely suggest that you go fuck yourself? And get a life.

PS. You might have noticed that my attempt to expose you for what you are is always the same. That’s because your Spam is always the same (Using fake links to your BS site which has no connection to your comments, which are deliberately dramatic to encourage people to click on the fake link) so it seems only fair that my exposure of your crap should also always be the same. An eye for an eye.

Tallest Skil's picture

When Trump wins, do you really expect Obama to go down without leaving his mark? He'll absolve a trillion dollars of student loan debt or car debt or both with the stroke of his pen in an executive order.

The legality of it will be strung out for months and the economy will collapse. The point is, these debtors will slip away. And never mind that the banks can't afford to NOT grant some sort of reprieve if they want the scam to keep going. Can't keep lending to people who can't even make interest payments, after all...

American Psycho's picture

I have my student loan cash in a savings account ready to pay it all off on the day of graduation.  If it gets absolved, I'll be promptly turning that Fiat into Phys.

HardAssets's picture

The banks 'loaned' Nothing. They made it up outta thin air with a few computer keystrokes. This is a massive fraud and entirely
un-Constitutional. If Americans woke up' that 'debt problem' would instantly be transformed. And the banksters and their paid off politicians would have a Real problem on their hands.

RafterManFMJ's picture

Eggzactly.

They fraudulently and unconstitutionally counterfeit the currency by emitting credit into the system that THEY PRODUCE OUT OF THIN AIR.

Odious debt. Fuck them, come and try to collect. I'll write "50K" on a sheet of office paper and tell 'em to keep the change.

roddcarlson's picture

Sadly you are right, but that doesn't help the people who tried to earn an honest living and live within their means. They had to then compete with money laundered through loans on such things as cars and housing and food. For those people their hard earned bucks 10 and even 20 years ago were competing in a sea of worthless and easy loaned money. They had to work that much harder, some forsake larger families, or even having kids at all. Others because the EZ money couldn't send their kids to college off the honest money they earned because they had to live within their means while their neighbor spent both their share and their own bidding on these items. So you say the banks stole the money by printing the money from thin air, but who they really stole from were honest men and women who never enjoyed the fruits of their labor years ago. Quite frankly, I do have heart for the indebted, but it's also a bit crooked to act like they owe nobody anything. They are pals in the past with the banks and the divorce they are asking now is only too convenient for them by scaping their mating partners (banks).

Elco the Constitutionalist's picture

Trickle up economics baby! And the ignorant goy are brainwashed to think that usury is both neccessary and deireable.

Killdo's picture

you are right - Michael Hudson (in his book Killing the Host) explains how it's done through banks sponsoring deprtments at famous universities like Harvard (we give you money to build a new building - you teach sheeple that debr is very good for the economy - and while you are at it - change the name to asset allocation instead of usury...etc)

I have a degree in economics (from England) and they taught us so much shit and lies it took me a decade to forget the lies they brainwashed me with

thatthingcanfly's picture

Ahh, someone's been watching Mike Maloney's videos.

zvzzt's picture

Banks won't crush them. Not in their interest. .Gov will 'forgive them' and thus instantly gaining 80 mln votes. Banks will not be played the blame-card and at the same time compensated by .gov. 

Everybody wins.... That is, except the honest and mentally sane people. But 'we' don't care about them anyway... 

Kidbuck's picture

Never didn't pay a bill in my 60 years, until last year. Now I'm one of the 35 percent. Went in for a semi annual blood test to the same facility I had been using for years. Always paid about $700 for me and the wife. Was given no indication that their ownership and rates had changed. A month later I got a bill for $11,000. Plus a notice that my insurance company had been billed, and had already paid $5,000 for two simple blood tests. By the way, they pulled this stunt on half of Florida.

Fuck these Jews from Wall Street that bought the Medical Center. That bill will be on my credit report when I die.

truthalwayswinsout's picture

Full blood tests only cost $80 to do at the place that actually does them. If they mark up from there you are looking at $200-300 depending on their overhead.

MalteseFalcon's picture

When you are deep in debt, it is exceedingly difficult to build up any wealth of your own.  This is one of the primary reasons why 69 percent of all Americans have less than $1,000 in savings today.

Before we get too weepy about our friends who couldn't understand how 19% credit card interest works, let's remember when they finally figure it out and save that $1,000, they still won't build wealth with 0% interest.

Somehow I think they understand that. 


PTR's picture

 

Bad decisions on our part does not justify predatory, wealth-extracting banking practices on their part. 

MalteseFalcon's picture

Awareness of bank practices are part of the decision making process.

How many bad decisions does each debtor make?

How many chances do you want?

If your debt got wiped out, you'd never do it again, right?

Just so you don't get fooled again, when you get out of debt and start to save, you won't get paid any interest on your savings.

Because the people who continue to make bad decisions need 0% interest rates.

Kidbuck's picture

You are right. We actually got a bill from a lab in St Paul, MN for $300. and we immediately paid it in full. Then we got the bill from the Medical conglomerate that owns the blood drawing facility in FL where we live.

So, I called Aetna and asked them how much a blood test should cost. Was impossible to get an answer. Fuckin' weasels. I asked them why did they pay the ridiculous amount of 5 grand for 2 simple blood tests? They said, "It's not our job to evaluate prices." We are so screwed.

MsCreant's picture

What I have to say might work if you are otherwise debt free.

If you own your house, your car. If you have no other debt than this.

If you live in a state where they will not take your house or car.

Make sure the debt is on a credit card. 

Don't use the card for a year. Don't run up other debt. Get call block or even change your number. Bankrupt the card after a year. It will cost you the price of filing.

Fuck them.

The story you told is outrageous, dare I say fraud. You should not have to swallow that. 

Just sayin'.

People BK medical debt all the time. It is the number one reason people BK.

I am debt free, never gone bankrupt, but I wouldn't hold it against you a millisecond if you did it.

RafterManFMJ's picture

Two true stories: years ago I needed blood work done and called around looking for a "cash price" as I had no insurance.

Costs ranged from $75 to $600 for the same blood work; even then I thought "What the fuck? How is that possible?" I don't go look at a Honda CRV and find it's 25K at one dealership and 150K at another one.

#2. I've found getting work done for cash at a place like Quest Diagnostics is actually cheaper than using my insurance - again, what the actual FUCK?

The system can burn, and I'll raise a glass as it does.

malek's picture

Thanks for letting us know - especially Quest Diagnostics I would have expected to completely refuse any form of test for cash payment.

tarsubil's picture

Funny thing is. You talk to the jew owners and they probably don't know the first fucking thing about blood tests. Those poor fucking jews. Boo fuckity hoo for those poor oppressed jews.

Kidbuck's picture

You're right, too. I called everyone in every chain of command connected with this. It is Yellen's fault. These Wallstreet assholes have all this free money bulging out of their pockets. So, they buy up a local hospital at bubble prices. Then they raise prices on all medical procedures to cover the hospital's purchase price plus give themselves fat returns.

It is really quite brilliant. Even if no customer can afford to pay they ream the insurance company 10 times their costs for doing nothing. The lab that does the actual work also bills the customer. Even if they drive away 90 percent of their customers, they still make 10 times as much for doing a tenth of the work. Somehow it must make sense to someone. I'm thinking they sell stocks or bonds in this scheme or something and then bail the fuck out. Or do they rape medicare for ever and ever?

g speed's picture

My kid had blood work in North Fl. I went with her--I paid up front in cash-$99, and got a receit with paid on it--when the bill came I just pushed a copy of the receit in the envelope and put the whole thing in a new envelope and sent it to the address on the bill---I didn't even look at the bill-just mailed it back---that was fall of 2015--never heard another word from them. The doctor my girl went to takes cash--50 bucks for a school checkup with paperwork for shots ---cash works folks---my dentist takes 60 bucks for a cleaning and xray,scan photo. fillings are 60 bucks extra. --my son had four wisdom teeth extracted by a dentist/surgeon for $900--total out the door three visits. I stopped buying any kind of insurance many years ago--I saved enough so that I'm able to self insure. 

harleyjohn45's picture

That will work when you only have minor things done, but let someone get cancer or some other bad disease, you will need some help.  Maybe some kind of high deductible catastrophic policy.  Then again you can just walk in to the hospital and tell then, here I am.

RafterManFMJ's picture

Get you paperwork together and send this story to Karl Denniger of the Market Ticker; he'd love to see it and do a post about it!

Kidbuck's picture

Yes, I follow Carl and he is good at covering these sorts of things. But in central Floriida the MSM already did stories on hundreds just like me. Turns out the Governor, Scott, actually owns some of these facilities. So, just as in D.C., don't expect the Florida AG to do anything when his boss is involved.

HRH of Aquitaine's picture

Caveat emptor. Buyer beware.

With that attitude I am not suprised the "facility" didn't give you a heads up on the rate change! What a fucking moron. I don't know any blood work that costs $11,000. If you have insurance they normally cover yearly blood tests for a small co-pay. It is hard to tell if the problem is the insurance you selected, the medical center that performed your labs, or your shitty attitude that is the problem. I am figuring it is your shitty attitude.

Yes, I down voted you, for the "it's the Jews" comment. Go crawl back in your hole, moron.

harleyjohn45's picture

I calling bullshit, no way 2 bloodtest cost 11,000.00.  Take your shit somewhere else.

Kidbuck's picture

You are confusing cost with price. Orlando and Tampa and Citrus County newspapers all documented this well a year or 2 ago.

Kidbuck's picture

Some of my best friends have been Jews. However, when I traced the owners of this mess back to Lord Blackfiend and GS I could see they wouldn't be expected to act otherwise. When a Baptist or a Buddist screws me over I would say something different. 

max2205's picture

Call Action 4 news ... you got fucked for sure 

Kidbuck's picture

The news shows are aware of many in this boat. I didn't lose much because I didn't pay them anything beyond the St Paul lab bill. Aetna gets $5 grand a year from me anyhow, whether I use them or not.

slaughterer's picture

35% in the USA.  So what.  It must be 80% in the EU. 

Cryoprase the Troll's picture

Actually, no. Household debt is bigger in the EU, but it's generally secured as a mortgage on property, which are "performing loans" not credit card defaults. The effective interest rate is therefore lower.

RafterManFMJ's picture

LOL how are you going to get "shafted?" They're going to rob you to pay paul?

If you had half a brain you'd run your cards up, NOW, on ammo and food and lol at the banks creating credit (counterfeiting) the currency by giving them a big FUCK YOU! when they try to collect unsecured debt.

Get aboard the train and come along for the win pal, this shit ain't getting paid back.

DontGive's picture

Yes. Get aboard the train of slavery and fuckery.

Enjoy paying higher insurance rates (tied to credit) and finding a place to rent.

Now if you want to live in a tent on the street, that's a different story. Lot's of people are doing it, it's a lifestye.