Chapter 7 bankruptcy offers relief for many individuals being harassed by debt collectors.
According to a study recently released by the Urban Institute, over 35 percent of Americans have at least one account that has been sold to a debt collection agency due to non-payment. These individuals then face harassing phone calls, further damage to their credit, and even potential job or housing discrimination. If they are able to repay their overdue accounts and restore their credit at all, it will be a long uphill battle to do so.
Debt Collection Statistics
According to the Urban Institute study, the average amount of debt that individuals owe to collection agencies is $5,178. Medical bills make up about 37 percent of this debt, student loan debt accounts for 25 percent, and credit cards account for 10 percent. The remaining debt may be owed to various retailers and utilities. Southern and Western states seem to have the biggest concentration of individuals with accounts in collections. Texas is especially hard-hit, with Dallas, El Paso, Houston, McAllen, and San Antonio all having over 40 percent of their population facing collection activities.
Smaller Debts Still Pose Problems
The fact that America’s overall credit card debt load has shrunk in the past 5 years is sometimes pointed to as a sign of a healthier, recovering economy. However, this new study points out a disturbing trend though the amount of debt may be lower now, just as many people are getting reported to collection agencies for unpaid bills now as a decade ago. Why? Because wages have barely kept up with inflation, and more people are living on tighter budgets. Individuals with low-paying jobs in the service sector or in construction and retirees living on a fixed income are among the groups most commonly targeted by debt collectors, despite the fact that they tend to actually carry less total debt than wealthier groups. For example, in San Jose CA, the average debt load is $97,150, but because incomes and real estate values are high, few residents are delinquent. In a poorer city such as McAllen TX, the average debt load is just $23,546 but over 50 percent of residents are behind on their bills.
Escape Debt Collectors Through Bankruptcy
If you have debt collectors calling you day and night, Chapter 7 bankruptcy might provide welcome relief. This type of bankruptcy can be used to discharge credit card debt, medical debt, payday loans, and other types of unsecured debt. You can typically keep your home, vehicles, qualified retirement savings, and disability benefits while filing for Chapter 7. While you can file for bankruptcy on your own, it is better to hire an experienced bankruptcy attorney to guide you through the process. This helps ensure that all the paperwork gets filled out correctly so you can get maximum debt relief as quickly as possible. Plus, your attorney will be able to handle all communications with your debt collectors so you never have to endure their harassing attentions again.
