Tuesday, July 29, 2014

Debt Collections: A huge problem for many Americans

Study: 35 percent in US facing debt collectors: Associated Press

In the above article, its reported that more than 1/3 of all Americans are being confronted by debt collections. Not only are they having to deal with the collection calls and other practices, for many who find themselves with accounts in collection, they also find themselves with a reduction in their credit score, difficulty finding housing and employment and the potential to be required to pay high deposits for services.  In many cases, accounts falling in to collection are the result of rising costs of services, increased costs of goods, which may divert funding away from bills to other necessities, and even extreme weather conditions can make paying utility bills more difficult.  With the stagnant wage growth in America, and the rising costs of living in many cities there are several important things the the Prosperity Center staff encourages. 
We work diligently to ensure that our clients can create a budget that helps them to get their finances on track.  We also help clients work towards keeping to their budget.  Our employment coach works with clients to help them find employment that pays a liveable wage.  She also works to help clients who are employed find ways to help them find ways to increase their salary through negotiation skills advanced training and/or certifications.
In addition to this, what's needed are some policy changes.  It isn't fair to the credit profile of many Americans to spend years paying their utility bills on time and to never have that information reported (Utility bills, including cell phones and cable services, are not reported monthly on your credit report).  The only time these accounts will report is when the account falls behind and goes in to collections.  One opportunity for policy improvements involves reporting the "full file" about clients.  This way in addition to the negative impact of a collection, clients will also have an account that shows the years of on time payments, allowing viewers of the report to see how well individuals pay their obligations and helping individuals to better showcase their good payment history.

No comments:

Post a Comment