South Carolina has second-highest rate of delinquent debt in the U.S.

State is behind only Nevada for the number of people with debt in collections

A recent survey by the Urban Institute has found that a worryingly high percentage of Americans have debt in collections, with southern states being particularly affected, according to the Charleston Post and Courier. The report found that 35 percent of Americans have a debt in collections, with that figure exceeding 40 percent in South Carolina. One of the biggest drivers behind the high delinquency rates is credit card debt and other non-mortgage forms of debt, which continue to burden millions of consumers, but especially so in South Carolina.

One in three Americans in collections

As Forbes reports, the study found that over one in three Americans has a debt in collections. The figure is particularly disturbing since it means that despite the economy showing signs of recovery, delinquency rates have nonetheless remained the same as they were before the Great Recession.

Nevada, which was at the center of the foreclosure crisis in 2008, saw the highest delinquency rates, with South Carolina coming in second. Both states had at least 40 percent of their populations with a debt currently in collections. According to the Post and Courier, wages in South Carolina are lower than in neighboring states, yet borrowing for non-mortgage loans, such as credit cards, is higher.

Consequences of collections

The disturbingly high figures show that many Americans, and particularly South Carolinians, are continuing to struggle to get by. Having a debt in collections not only affects a person's credit score, it can make it more difficult to get a job, rent a house, or apply for a mortgage.

Additionally, a delinquent debt stays on a credit report for seven years after it has been paid off or removed from collections, meaning that the longer the debt remains in collections, the longer it will stay on a report. The study also points out that many people are completely unaware they have a debt in collections until they take the time to review their credit file.

How bankruptcy may help

For people that are dealing with insurmountable debt and unwelcome creditor phone calls, the best option may be to consider filing for bankruptcy. While bankruptcy is rarely a welcome prospect, it can be the step many people need to restart their financial lives instead of pointlessly trying to keep up with interest charges and minimum payments that are unlikely to actually lead to a large debt ever being paid off.

Bankruptcy, however, is a complicated process and people should contact a qualified bankruptcy attorney beforehand. An experienced attorney can help negotiate with creditors and assist in making sure that a person's assets and property will not be repossessed or foreclosed.