Americans appear to be reverting to pre-pandemic borrowing habits, causing total U.S. household debt to hit a record high $ 15.24 trillion over the summer, according to a November report from the Federal Reserve Bank of New York. All major sources of credit – mortgages, car loans, student loans, and credit card balances – are heading towards, or have exceeded, pre-pandemic levels.
But examining the economic health of households during the peak of the coronavirus pandemic in 2020 shows Americans took some of that emergency pandemic-related stimulus money and paid off some of their debts.
The result? From February to October 2020, mortgage defaults decreased and credit scores increased. The share of people with debts in collection declined slightly, while the median amount of debts in collection only increased by $ 16, to reach $ 1,849, according to the nonprofit think tank Urban Institute.
A debt in collection occurs when a creditor, such as a credit card issuer, cancels the debt as a loss after a certain period of non-payment, usually after 180 days, and sells it to a collection agency. . The borrower’s credit rating then collapses, and stressful calls from the collection agency begin.
To identify the 50 counties where the debt in collection increased the most during COVID-19, 24/7 Wall St. ranked the counties based on the evolution of the median debt in collection from February 2020 to October 2020 to the using data from the Urban Institute report: “Credit health during the COVID-19 pandemic. “Only 2,225 counties with data were taken into account.
The amount of debt in collection varies geographically, but it is generally higher in low-population areas with a significant number of low-income people and fewer local employment opportunities compared to more densely populated and economically active areas. . (This is the worst county to live in.)
For example, Elko, Nevada, a county of about 20,500 people located 230 miles west of Salt Lake City, saw a $ 1,090 increase in median debt collection from February to October 2020, to 3 $ 754. About one in five residents – with a credit bureau record – in this northern Nevada county had debt in collection. (Find out which counties have the most medical debt in collection.)
Median debt collection ranged from $ 1,765 in Kingfisher, Oklahoma, to $ 3,989 in Callahan, Texas among counties that saw household debt rise dramatically.
Here are the counties where household debt increased the most during the COVID-19 pandemic
Click here to see our detailed methodology