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The Magnitude of Consumer Debt...

  • The American Collectors Association (ACA) estimates that bad debt costs every man, woman and child in the United States $344 per year. This means that a family of four pays $1,376 more for goods and services during the year.
  • In March 1997, outstanding consumer installment debt totaled $1.2 trillion, a 7 percent increase over March 1996.
  • According to the National Foundation for Consumer Credit, 54 percent of people surveyed said it is tougher to pay their bills today than it was three years ago. And 89 percent said it was easy to get into debt today because of the availability of credit.
  • For the first time in the history of the U.S. courts, bankruptcy filings surpassed the one million mark -- or the equivalent of about one for every 105 U.S. households -- in a single 12-month period ended June 30, 1996.
  • In the first half of 1996, $32.7 billion was added to the nation's credit card balance sheet, according to the Federal Reserve. This follows 1995's $77 billion increase.
  • More than half (53%) of consumers surveyed by the Bankcard Holders of America said they were in debt due to overspending. Medical bills, college expenses and job layoff were the top three reasons cited for overspending.
  • There were 501.8 million active credit cards in force in second quarter 1996, compared with 456.1 million in the second quarter 1995, according to Card Management Information Services.
  • A recent study by the American Bankers Association found that check fraud cases reported by the banking industry increased from 537,000 in 1991 to 1.3 million in 1993, the most recent year for which national statistics are available. Dollar losses associated with that fraud increased 40 percent from $568 million to $850 million.

  • The Scope of the Industry
  • Professional, third-party collection agencies collected and returned more than $25.8 billion to the U.S. economy in 1995.
  • According to ACA's 1996 Cost of Operations Survey, an estimated 383 million new accounts, totaling $117.4 billion were placed for collection with professional, third-party collection businesses in 1995.
  • With a projected increase of 68.4 percent, credit reporting and collections will create more new jobs between 1994 and 2005 than any other small-business-dominated industry in the nation, according to the U.S. Small Business Administration. During that same time frame, the SBA places credit reporting and collections as the fourth fastest-growing small-business-dominated service industry in the United States.
  • The federal law regulating third party collection businesses is the Fair Debt Collection Practices Act, passed in 1977, and enforced by the Federal Trade Commission. Thirty-three states have either licensing requirements or require that a collector register or certify their right to do business in the state.

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