Urban Institute Studies: Debt in America and Delinquent Debt in America

Debt in America Abstract:

Debt can be constructive, allowing people to build equity in homes or finance education, but it can also burden families into the future. Total debt is driven by mortgage debt; both are highly concentrated in high-cost housing markets, mostly along the coasts. Among Americans with a credit file, average total debt was $53,850 in 2013, but was substantially higher for people with a mortgage ($209,768) than people without a mortgage ($11,592). Non-mortgage debt, in contrast, is more spatially dispersed. It ranges from a high of $14,532 in the East South Central division to a low of $17,883 in New England.

Delinquent Debt in America Abstract:

Roughly 77 million Americans, or 35 percent of adults with a credit file, have a report of debt in collections. These adults owe an average of $5,178 (median $1,349). Debt in collections involves a non-mortgage bill—such as a credit card balance, medical or utility bill—that is more than 180 days past due and has been placed in collections. 5.3 percent of people with a credit file have a report of past due debt, indicating they are between 30 and 180 days late on a non-mortgage payment. Both debt in collections and debt past due are concentrated in the South.

Commentary:

The study on Delinquent Debt in America, finding that on-third of Americans have a debt in collections, has garnered more attention in the media, but is actually more interesting if read in conjunction with its companion study, Debt in America, released at the same time.  Focusing on the non-mortgage debt, as that is what is more susceptible to reduction in bankruptcy, albeit not completely, due to non-dischargeable debts like student loans and taxes (the later is not included in this amount), the following comparison arises by combining data sets:

Debt, Delinquent Debt, Income and Ratios by Census Division (2013 dollars)
Census Division Total Average Non-mortgage Debt Average Non-mortgage Debt in Collections Ratio of Average Non-Mortgage Debt in Collections to Total Average Non-Mortgage Debt Average Household Income Ratio of Average Non-mortgage Debt to Average Household Income Ratio of Average Non-Mortgage Debt in Collections to Average Household Income
Northeast                       
New England $17,883.00 $4,801.00 26.85% $86,283.00 20.73% 5.56%
Middle Atlantic $17,189.00 $4,895.00 28.48% $80,582.00 21.33% 6.07%
Midwest            
East North Central $15,532.00 $4,727.00 30.43% $65,877.00 23.58% 7.18%
West North Central $16,043.00 $5,492.00 34.23% $67,020.00 23.94% 8.19%
South            
South Atlantic $16,138.00 $5,258.00 32.58% $71,633.00 22.53% 7.34%
East South Central $14,532.00 $4,748.00 32.67% $57,511.00 25.27% 8.26%
West South Central $15,260.00 $4,896.00 32.08% $65,843.00 23.18% 7.44%
West            
Mountain $16,177.00 $6,171.00 38.15% $70,512.00 22.94% 8.75%
Pacific $15,259.00 $5,517.00 36.16% $82,134.00 18.58% 6.72%
United States $15,898.00 $5,178.00 32.57% $72,254.00 22.00% 7.17%

This shows that the Midwest and South have the highest levels of non-mortgage debt in collections as a percentage of household income, particularly compared to the New England and Pacific Census Divisions.

Then compare against bankruptcy filings (which required reconfiguration of statistics from the Administrative Office of the Court, since it tracks by State and Federal Circuit, but not Census Division):

Bankruptcies by Census Division  
Census Division Non-Business Bankruptcies Total Population

(7/2013 est.)

Bankruptcies per 1,000
Ch.  7 Ch.  11 Ch.  13 Total
Northeast
New England 23,185 44 4,313 27,542 14,618,806 1.88
Middle Atlantic 67,496 112 23,671 91,279 41,324,267 2.21
Midwest
East North Central 154,103 83 54,800 208,986 46,662,180 4.48
West North Central 43,942 18 14,423 58,383 20,885,710 2.80
South
South Atlantic 126,703 282 83,766 210,751 61,783,647 3.41
East South Central 47,234 62 51,732 99,028 18,716,202 5.29
West South Central 35,571 55 40,168 75,794 37,883,604 2.00
West
Mountain 69,641 193 14,739 84,573 20,795,958 4.07
Pacific 134,588 428 36,623 171,639 51,373,178 3.34
United States

(Excl. territories, Incl. DC)

702,463 1,277 324,235 1,027,975 314,043,552 3.27

The ranking of Census Bureau Divisions by ratio of non-mortgage debt to household income is:

Census Bureau Division Ratio of Average Non-Mortgage Debt in Collections to Average Household Income
Mountain (AZ, CO, ID, MT, NM, UT) 8.75%
East South Central (AL, KY, MS, TN) 8.26%
West North Central (IA, KS, MN, MO, ND, NE, SD) 8.19%
West South Central (AR, LA, OK, TX) 7.44%
South Atlantic (DC, DE, FL, GA, MD, NC, SC, VA WV) 7.34%
East North Central (IL, IN, MI, OH, WI) 7.18%
Pacific (AK, CA, HI, OR, WA) 6.72%
Middle Atlantic (NJ, NY, PA) 6.07%
New England (CT, MA, ME, NH, RI, VT) 5.56%

And  the ranking of Census Bureau Divisions by bankruptcies per 1,000  is:

Census Bureau Division Bankruptcies per 1,000
East South Central (AL, KY, MS, TN) 5.29
East North Central (IL, IN, MI, OH, WI) 4.48
Mountain (AZ, CO, ID, MT, NM, UT) 4.07
South Atlantic (DC, DE, FL, GA, MD, NC, SC, VA WV) 3.41
Pacific (AK, CA, HI, OR, WA) 3.34
West North Central (IA, KS, MN, MO, ND, NE, SD) 2.80
Middle Atlantic (NJ, NY, PA) 2.21
West South Central (AR, LA, OK, TX) 2.00
New England (CT, MA, ME, NH, RI, VT) 1.88

So while New England has both the lowest ratio of debt in collection to household income and bankruptcies per 1,000 and the East South Central has the highest in both, there are differences.  For example, the West South Central division has the third highest ratio of debt in collection, but the second lowest bankruptcy rate.  Perhaps, as other studies have shown, the generous exemptions, particularly the unlimited homestead exemption in Texas, which dominate the division, account for the comparatively low bankruptcy filings.

For a copies of the studies, please see:

Debt in America

Delinquent Debt in America

 

About

1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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