One-third of adults have debt in collection

Roughly one in three adult Americans has past-due debt that's been turned over to a collections agency, according to a new study.

Southern states fare worst in the study, with most having four in 10 residents with credit files that show debt in collection. The New England states fared best.

About one in four Iowans have debt in collection with average of $4,810, according to credit reporting agency TransUnion. Roughly 4.1 percent of Iowans have debt that is 90 days or more past due.

The findings suggest millions of Americans continue struggling to make ends meet in an uneven economic recovery that has benefited the top end more than the middle and bottom.

'Debt in collection is pervasive, and it threads through nearly all communities,' said Caroline Ratcliffe, the lead researcher on the report entitled Debt in America, published by the centrist think tank Urban Institute. 'Every third person you see on the street has debt reported on their credit file.'

Among the findings, based on records shared with researchers by TransUnion, are:

•35 percent of Americans with a credit file have debt in collection reported in these files. Bills more than 180 days overdue are sent to collection agencies.

•The average amount owed on bills in collection is $5,200.

•The average amount owed on past-due debt not yet in collections is $2,258.

•Americans with bills in collection and past-due debt owe a combined average of $9,123.

Future research will focus on a breakdown of debt by category, which will give a better sense of how much is credit card debt versus medical bills or student loans.

'The big thing that was changing is big increases in student loan debt, which would also be part of this,' said Ratcliffe. 'We know that a lot of the recovery happened more at the top than the bottom. People with delinquent debt are those least likely to be (able to) pay down the debt.'