35% of Americans Facing Debt Collectors(hosted.ap.org)
hosted.ap.org
35% of Americans Facing Debt Collectors
http://hosted.ap.org/dynamic/stories/U/US_DEBT_STUDY?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-07-29-00-12-33
16 comments
Looks like the debt issue in the U.S. is systemic within the general population and not isolated to the U.S. government.
Get it now, pay later. What could be wrong?
Keep in mind that most personal bankruptcies are caused by medical bills. You can not exactly postpone critical operation until you save money. You can not work while you are sick a lot. And medical prices are non-transparent, patient have no idea which tests/interventions are needed and which are not, so it is hard to price shopping even if you have time for it.
If 35% percent of population do something, then it is better to look for structural reasons other then "population is stupid" simplification.
If 35% percent of population do something, then it is better to look for structural reasons other then "population is stupid" simplification.
Why does there have to be a "structural reason" for it? Why must there be external blame assigned to something simply because it is commonplace in a population group? I'm curious what arbitrary line you've drawn that lets you delineate between "common-place in the population" vs "due to structural reasons"?
Note how I don't use the phrase "population is stupid", or that the reason is "stupidity". It could be a whole host/variety of reasons for people choosing to ignore possible life events. Everything from a misguided belief in a non-existent "safety-net", conscious decision to accept the risk, or plain not even remotely foreseeable life-altering event. Somehow, I doubt 35% falls under "unforeseeable".
Note how I don't use the phrase "population is stupid", or that the reason is "stupidity". It could be a whole host/variety of reasons for people choosing to ignore possible life events. Everything from a misguided belief in a non-existent "safety-net", conscious decision to accept the risk, or plain not even remotely foreseeable life-altering event. Somehow, I doubt 35% falls under "unforeseeable".
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Perhaps wages not keeping pace with inflation has had an effect?
That's one thing, but another is how people feel entitled to luxury products - entertainment, technology, cars, etcetera. Things like I /need/ a car, so I'll get a new one on a payment plan. Or I /need/ an iPhone because of Reasons, disregarding how it's a very expensive phone with a very expensive phone plan alongside it.
I guess you could call that some kind of inflation too, but it's pretty self-inflicted.
I guess you could call that some kind of inflation too, but it's pretty self-inflicted.
You very rarely need an iphone.
With a car you have to take into account whether it can be assumed to improve your likely hood of getting a better job/getting any job/keeping your current job or otherwise make you money.
A cell phone may very well be necessary to get a job. It likely doesn't have to be an iphone, but it may be the cheapest option if you can get one subsidized, especially since it allows you not to have to pay too much money right now.
In general debt can be a very good thing iff you can reasonably expect to make more money than you did before.
With a car you have to take into account whether it can be assumed to improve your likely hood of getting a better job/getting any job/keeping your current job or otherwise make you money.
A cell phone may very well be necessary to get a job. It likely doesn't have to be an iphone, but it may be the cheapest option if you can get one subsidized, especially since it allows you not to have to pay too much money right now.
In general debt can be a very good thing iff you can reasonably expect to make more money than you did before.
Since the largest single cause of US personal bankruptcies is for medical care, I'm not sure how you draw that conclusion.
You can live without a car if there is an acceptable public transport. That being said, car ownership among young Americans is going down. There have been some "OMG car is independence and growing up, they do not care about that" cries few months ago.
I guess it is blamed if you buy a car (luxury) and blamed if you do not buy a car (car being a symbol) case.
I guess it is blamed if you buy a car (luxury) and blamed if you do not buy a car (car being a symbol) case.
There's still a certain amount of victim-blaming inherent in that point of view, when you consider the all-pervasive apparatus of psychological manipulation that has been brought to bear upon generations of consumers.
Obviously people are complicit in this.
Obviously people are complicit in this.
Maybe more this than blame the victim.
Could also blame the paperwork and complications we like to create for ourselves so some middleman, middle-company, or politician get their piece.
Could also blame the paperwork and complications we like to create for ourselves so some middleman, middle-company, or politician get their piece.
Having your job prospects threatened because you're unable to repay a hospital bill is the most broken, fucked up thing I've ever heard.
EDIT: Well, not the MOST broken and fucked up... but pretty fucking broken and pretty fucking fucked up.
EDIT: Well, not the MOST broken and fucked up... but pretty fucking broken and pretty fucking fucked up.
As a point of reference, the story of North Korean prisoner Shin Dong-hyuk (http://www.youtube.com/watch?v=Lr6Rw0ltFxc) is the single most broken, fucked up, yet amazing thing I have ever heard. Not trying to belittle hosiptal bill fuckery - I just love sharing this story.
Summary: Born in a concentration camp as punishment for family members defecting ("three generations punishment"). Turns in his mother and brother for trying to escape. Witnesses their execution. At age 23, inspired by the idea of being able to eat chicken and pork, he escapes. Manages to reach China with no prior knowledge of the outside world.
Summary: Born in a concentration camp as punishment for family members defecting ("three generations punishment"). Turns in his mother and brother for trying to escape. Witnesses their execution. At age 23, inspired by the idea of being able to eat chicken and pork, he escapes. Manages to reach China with no prior knowledge of the outside world.
Services, including medical care, are not free and debts must be paid. Credit rating agencies, as well as all reputation-reporting services, are protected speech.
As an American, what's fucked up to me is that in some other countries, you can actually be imprisoned for debt.
Job prospects can be threatened by many things that seem, at first glance, like they might not be related... and that may not be a bad thing in all cases. Let markets make their own decisions.
As an American, what's fucked up to me is that in some other countries, you can actually be imprisoned for debt.
Job prospects can be threatened by many things that seem, at first glance, like they might not be related... and that may not be a bad thing in all cases. Let markets make their own decisions.
I find it seriously scary how many Americans on the internet are totally brainwashed into thinking the free market is the greatest thing ever and there are absolutely no problems with it.
Medical care is not free, however in every country that has socialised healthcare (i.e. every developed country except the us) it is free at the point of use.
And if you're going to complain that it's more expensive because everyone's paying out of taxes, in 2012 the US actually spent more in taxes per person than e.g. the UK on healthcare[1]
Healthcare in the US is fucked up, and free markets are not the solution to every problem.
Medical care is not free, however in every country that has socialised healthcare (i.e. every developed country except the us) it is free at the point of use.
And if you're going to complain that it's more expensive because everyone's paying out of taxes, in 2012 the US actually spent more in taxes per person than e.g. the UK on healthcare[1]
Healthcare in the US is fucked up, and free markets are not the solution to every problem.
[1] http://wdi.worldbank.org/table/2.15"Medical care is not free, however in every country that has socialised healthcare (i.e. every developed country except the us) it is free at the point of use."
It's also "free at the point of use" in a free-market system. I just present my medical aid membership card and I get whatever I need; hospital, pharmacy, ambulance, etc. Yes, that is a present-day thing, not some fairytale future.
Not only that, but these "free-market" companies give out stuff for free because it is profitable to keep their members healthy. Gasp, benefits for free. They sometimes send out free traffic "officers" to congested intersections / accidents to help traffic along to prevent accidents, for non-paying individuals. Just a small taste of what a free-market system could do if left to its own devices.
I find it seriously scary how many People on the internet are totally brainwashed into thinking the free market is some sort of personified evil boogey-man and socialism is the panacea for all the world's ills. Both have their flaws, and both have benefits. How about you let people choose what they prefer?
It's also "free at the point of use" in a free-market system. I just present my medical aid membership card and I get whatever I need; hospital, pharmacy, ambulance, etc. Yes, that is a present-day thing, not some fairytale future.
Not only that, but these "free-market" companies give out stuff for free because it is profitable to keep their members healthy. Gasp, benefits for free. They sometimes send out free traffic "officers" to congested intersections / accidents to help traffic along to prevent accidents, for non-paying individuals. Just a small taste of what a free-market system could do if left to its own devices.
I find it seriously scary how many People on the internet are totally brainwashed into thinking the free market is some sort of personified evil boogey-man and socialism is the panacea for all the world's ills. Both have their flaws, and both have benefits. How about you let people choose what they prefer?
Healthcare in the US hasn't been free-market for a long time. Ironically, it's probably most like the thing free markets were "designed" to fix than anything else - things called "royal patents".
What this works out to in reality, divested of all the religious narrative, is that free markets are better than what were called "royal patents". This goes directly back to Adam Smith's "Wealth of Nations" and SFAIK, nobody's really improved on it.
"Wealth of Nations" was an expansion on economics from his "Theory of Moral Sentiments".
I would submit that a reasonable comparison between the U.K. and the U.S. is vanishingly close to impossible. Especially with the NHS; that was formed after the War when the country was in pretty poor shape. People had trouble getting 1500 calories a day. In the US around the same time, we ensconced employer based insurance. That was fine so long as large, monolithic corporations ruled.
The people you are probably decrying the most are those who hold that the Efficient Markets Hypothesis ( see, it's not even a theory yet ) always holds no matter what. We dunno. Modulo the EMH, free markets generally perform better. The only debate is whether or not health care is a public good. SFAIK, that is unsettled, too.
What this works out to in reality, divested of all the religious narrative, is that free markets are better than what were called "royal patents". This goes directly back to Adam Smith's "Wealth of Nations" and SFAIK, nobody's really improved on it.
"Wealth of Nations" was an expansion on economics from his "Theory of Moral Sentiments".
I would submit that a reasonable comparison between the U.K. and the U.S. is vanishingly close to impossible. Especially with the NHS; that was formed after the War when the country was in pretty poor shape. People had trouble getting 1500 calories a day. In the US around the same time, we ensconced employer based insurance. That was fine so long as large, monolithic corporations ruled.
The people you are probably decrying the most are those who hold that the Efficient Markets Hypothesis ( see, it's not even a theory yet ) always holds no matter what. We dunno. Modulo the EMH, free markets generally perform better. The only debate is whether or not health care is a public good. SFAIK, that is unsettled, too.
I like my European-style socialized healthcare system; but I'd just like to point out that there's nothing free about the US healthcare market.
Whether an actual free market would be better or worse than any of the current systems remains to be seen. But I'd rather have someone else try it :)
Whether an actual free market would be better or worse than any of the current systems remains to be seen. But I'd rather have someone else try it :)
I can agree that the US health care systems seems to be uniquely f-cked up. (No other term seems possible to apply.)
But centrally planned European health care systems are far from perfect.
I am familiar with the Swedish system and it is unable to diagnose problems because of administration. Afaik, international benchmarking comparisons supports this. The doctors at the "sharp end" don't have enough minutes per patient to find problems that aren't obvious.
People have to try to go to multiple doctors, until they find someone that isn't just too traumatized by the system to do their job.
I would guess somewhere between 0.5 and 5 percent (this has not been examined) of the Swedish population walks around with some simple to cure problem which lowers their life quality for years and decades. From myself and people I know -- knees, food allergies, lack of some vitamin/mineral, bacterial infections, thyroid problems, etc.
I have quite often heard the expression about someone with problems -- "too sick to get well". That is, that person is too ill to make enough noise that the medics have to take the energy and diagnose, just to get rid of him/her.
But centrally planned European health care systems are far from perfect.
I am familiar with the Swedish system and it is unable to diagnose problems because of administration. Afaik, international benchmarking comparisons supports this. The doctors at the "sharp end" don't have enough minutes per patient to find problems that aren't obvious.
People have to try to go to multiple doctors, until they find someone that isn't just too traumatized by the system to do their job.
I would guess somewhere between 0.5 and 5 percent (this has not been examined) of the Swedish population walks around with some simple to cure problem which lowers their life quality for years and decades. From myself and people I know -- knees, food allergies, lack of some vitamin/mineral, bacterial infections, thyroid problems, etc.
I have quite often heard the expression about someone with problems -- "too sick to get well". That is, that person is too ill to make enough noise that the medics have to take the energy and diagnose, just to get rid of him/her.
Saying that some harmful things ought to happen because of the invisible hand of the market, is like saying that things ought to stay down because of the invisible hand of gravity.
Americans can be imprisoned for debt too if the debt was caused by legal fees and fines.
This is result of QE. Cheep money doesn't solve problems.
I'm seriously wondering when/how this thing is going to blow. Debt is such a central part of everything American, and it's completely not sustainable. What's going to happen? Another credit crisis? Revolution? Mass evictions? Nothing?
We are experiencing the symptoms now; the ratcheting up of stress, mental illness, suicide and homelessness. And it will get worse.
I'm friends with a cop who has worked in downtown Toronto for over 20 years. He says suicide is "big right now, bigger than you think."
I'm friends with a cop who has worked in downtown Toronto for over 20 years. He says suicide is "big right now, bigger than you think."
Nothing. The American ruling class commands the most sophisticated propaganda apparatus ever seen in human history. Americans will be ground into dust and then they'll blame themselves for it.
It's happening now. I've been in California for a while, the state with the highest taxes, fastest growing companies, and largest population: people are sleeping in the streets like it's the third world. I understand it's just as bad in New York (where I used to live), just much less visible due to climate.
It seems to get steadily worse over time. I believe that the median resident's quality of life in this country is steadily falling in a lot of ways. The things that people used to believe made this country great (e.g. the first half of the 20th century) are today historical anomalies, completely foreign to the ages that came before and after.
The age of American exceptionalism is over and it's turning into just another place where everyone's backward and suffering.
It seems to get steadily worse over time. I believe that the median resident's quality of life in this country is steadily falling in a lot of ways. The things that people used to believe made this country great (e.g. the first half of the 20th century) are today historical anomalies, completely foreign to the ages that came before and after.
The age of American exceptionalism is over and it's turning into just another place where everyone's backward and suffering.
"The things that people used to believe made this country great" mostly took place in the second half of the 20th century, in the post-war boom period.
Look, all across Europe there are economic problems, but America (and to a lesser extent the UK) is the only country that's actually just scrapping large parts of its own landmass into Third World substates.
Look, all across Europe there are economic problems, but America (and to a lesser extent the UK) is the only country that's actually just scrapping large parts of its own landmass into Third World substates.
Sibling comment is right: the most likely answer is nothing. The US is quite a lot more politically stable than it was during the 60s. There are an awful lot of guns around but a near-total absence of any armed political movements outside the state itself.
The next most likely thing is another economic crisis, perhaps triggered by an oil crisis. Another war in the middle east, or cutting off the supply from Russia to Europe. Or the discovery that fracking decline rates are higher than expected.
Continued "Detroitization" is also likely - not collapse but a slow, painful decline into large areas of poverty and dysfunctionality.
The next most likely thing is another economic crisis, perhaps triggered by an oil crisis. Another war in the middle east, or cutting off the supply from Russia to Europe. Or the discovery that fracking decline rates are higher than expected.
Continued "Detroitization" is also likely - not collapse but a slow, painful decline into large areas of poverty and dysfunctionality.
I guess the trick is how can we to allow for capital infusion for growing companies while at the same time keeping the populace safe from predatory "financial products" and other chicanery which have been solely and purposeful over-designed to be unnecessarily complex, so as to enslave a (financially and mathematically) uneducated populace via illogical financial terms - mostly by people who do very little each day besides striving to find ways to assert their control over others.
i.e. the difference between a real, and progressive VC environment and just another Wall Street magic trick
i.e. the difference between a real, and progressive VC environment and just another Wall Street magic trick
How exactly are people supposed to pay their debt if they can't get a job because they have debt? An employer doing a criminal background check makes sense, a credit check far less so.
It might make sense to check that for people handling large amounts of cash (could potentially be tempted to take it).
I'm thinking this should only for people whose job involves handling large amounts of cash, like bank tellers, armored car drivers or casino employees. The checkout at Walmart or your local greasy spoon, not so much.
I'm thinking this should only for people whose job involves handling large amounts of cash, like bank tellers, armored car drivers or casino employees. The checkout at Walmart or your local greasy spoon, not so much.
How exactly are employers supposed to trust people to be responsible with the management of large corporate assets that weren't personally carrying adequate maintenance contracts on their single most important asset: their person?
By this logic, doctors that smoke, drink or/and are overweight should be fired - they don't properly maintain their own health, so should be disallowed to care about others. Would that be a good idea?
I would never do business with a doctor that smoked, nor would I hire a smoker to work in a key role in any business I had hiring authority within. It's a fundamental failing of ability to do cost/benefit analysis.
How many workers are "responsible with the management of large corporate assets" and have full control over their own financial situation (ie: no medical or educational debts)?
As a non-american I cannot understand why debt would hurt your job prospects. Can anyone clarify?
Payment or non-payment (overwhelmingly non-payment+) of debt is reported to credit reporting agencies. Employers, as part of an employment decision, are allowed by law to pull copies of credit reports. A poor credit report tends to be treated by many employers as an indication of the candidate being a poor hire so the candidate is rejected.
+ Noted because many sources of negative marks on a credit report (like a utility bill, mobile phone account, rent-to-own store, apartment lease, and so on) only report negative actions. If a person never pays late, the business doesn't report the favorable upside.
+ Noted because many sources of negative marks on a credit report (like a utility bill, mobile phone account, rent-to-own store, apartment lease, and so on) only report negative actions. If a person never pays late, the business doesn't report the favorable upside.
Cancerous use of credit score to indicate employment risk.
Indication of skill managing responsibility?
What exactly does it mean to have "debt in collection"? It seems to be a binary state, if so, what are the exact parameters for entering and exiting?
In practice, it means any debt where the original holder of the debt has determined that it is unlikely to receive payment from the debtor so the right to collect the debt is sold to a third party.
An example: Bob takes out a credit card with a limit of $500 and charges $300 to it. Bob makes no payments. After three months (90 days), interest, late fees, and so on have pushed the total debt to $620 and Bob's credit card issuer decides that Bob is unlikely to pay. The debt is sold to a collection agency and is written off as a bad debt on the books of the credit card company. The collection agency pays $20 for the debt (so low because Bob is, through external methods, deemed to be unlikely to pay any debts, much less an unsecured credit card) and now hassles Bob for the next several years.
At the point that the debt was sold is when most people consider it to be "in collections." You exit collections by paying the debt.
An example: Bob takes out a credit card with a limit of $500 and charges $300 to it. Bob makes no payments. After three months (90 days), interest, late fees, and so on have pushed the total debt to $620 and Bob's credit card issuer decides that Bob is unlikely to pay. The debt is sold to a collection agency and is written off as a bad debt on the books of the credit card company. The collection agency pays $20 for the debt (so low because Bob is, through external methods, deemed to be unlikely to pay any debts, much less an unsecured credit card) and now hassles Bob for the next several years.
At the point that the debt was sold is when most people consider it to be "in collections." You exit collections by paying the debt.
A good portion of it might be with people simply forgetting to pay bills and/or not caring.
However, statistics can be misleading if not filtered.
I am proud to say, I am part of this 35%. I have owed $15 to a hospital for a long time. I also owed a bigger bill for a long time. Despite having the money. We moved, lost track of correspondence, had life happen to us etc.
I'm not sure, however, which employers reject you on such bases. When I worked at a hospital, we had background checks. At my present job, no such thing.
I am proud to say, I am part of this 35%. I have owed $15 to a hospital for a long time. I also owed a bigger bill for a long time. Despite having the money. We moved, lost track of correspondence, had life happen to us etc.
I'm not sure, however, which employers reject you on such bases. When I worked at a hospital, we had background checks. At my present job, no such thing.
I'm genuinely puzzled by the central importance of debt in the lives of Americans (reflected for example in the importance of the infamous credit score which is something my country also has, but which barely anyone cares about).
Imagine you'd like to buy something you don't have enough cash to pay up front. Assuming you're not in immediate necessity, you're faced with the choice of saving up the money and delaying the purchase or borrowing the money and buying now. If you delay the purchase you can invest or lend the money and earn capital gains or charge interest. If you buy now you have to pay the interest to someone else. This means the ultimate amount you spend is lower if you delay the purchase (your savings are augmented with capital gains or charged interest and you avoid paying the interest to someone else). The upshot seems to me that unless you're buying something out of immediate necessity you are better off delaying the purchase.
Is the central role of debt due to the fact that most shopping done in the US is done out of immediate necessity (which may suggest wide-spread poverty) or is it simply wide-spread impatience or somethings entirely different or more complex?
Imagine you'd like to buy something you don't have enough cash to pay up front. Assuming you're not in immediate necessity, you're faced with the choice of saving up the money and delaying the purchase or borrowing the money and buying now. If you delay the purchase you can invest or lend the money and earn capital gains or charge interest. If you buy now you have to pay the interest to someone else. This means the ultimate amount you spend is lower if you delay the purchase (your savings are augmented with capital gains or charged interest and you avoid paying the interest to someone else). The upshot seems to me that unless you're buying something out of immediate necessity you are better off delaying the purchase.
Is the central role of debt due to the fact that most shopping done in the US is done out of immediate necessity (which may suggest wide-spread poverty) or is it simply wide-spread impatience or somethings entirely different or more complex?
I think it's just a lack of education, and it's not limited to the US, mind you. People seem to have this belief that credit is free money that they can delegate to the future. Since the detriment is deferred, people don't really examine it for face value. There's that, and most are really bad at visualizing debt.
I recently watched a documentary about the state of debt in the UK. It was quite shocking, normal regular people that got addicted to debt, and just spent, spent, and spent. Meanwhile, the banks kept rewarding their "debt" with higher limits and more fresh cards. These people took out ridiculous sums of money, sums that they need to spend probably decades paying off simply because their salaries are so low.
I recently watched a documentary about the state of debt in the UK. It was quite shocking, normal regular people that got addicted to debt, and just spent, spent, and spent. Meanwhile, the banks kept rewarding their "debt" with higher limits and more fresh cards. These people took out ridiculous sums of money, sums that they need to spend probably decades paying off simply because their salaries are so low.
As counterexample to the way Americans handle debt the way some european countries handle debt is really fucked. Spain is going through a deep recession (25% unemployment, even now) because you simply cannot declare bankruptcy.
According to a friend a lot of local and international banks were quite happy to make Spanish loans since no matter what happens the debtor has to pay. In the US, a bad debt leaves your credit report after 7 years, and personal bankruptcy after 10 years. Since there is no financial reset button in Spain all the bad shit that happened in 2009 is still making waves 5 years later. The worst affected, small business owners, committed suicide or self-immolation realizing they had no escape and no future.
According to a friend a lot of local and international banks were quite happy to make Spanish loans since no matter what happens the debtor has to pay. In the US, a bad debt leaves your credit report after 7 years, and personal bankruptcy after 10 years. Since there is no financial reset button in Spain all the bad shit that happened in 2009 is still making waves 5 years later. The worst affected, small business owners, committed suicide or self-immolation realizing they had no escape and no future.