The Magnitude of Consumer Debt ...The Magnitude of Consumer Debt ACA estimates that bad debt costs every man, woman and child in the United States $375 per year. This means that a family of four pays $1,500 more for goods and services during the year. In May 1998, outstanding consumer installment debt totaled $1.2 trillion, a 4 percent increase over May 1997. According to a study by the National Foundation for Consumer Credit, 54 percent of people surveyed said it was tougher to pay their bills than three years earlier. And 89 percent said it was easy to get into debt today because of the availability of credit. According to the Administration Office of U.S. Courts, bankruptcy filings for calendar year 1997 increased by 19 percent to a record high of 1,404,145 filings. According to The Nilson Report, Americans owed $560 billion on all types of credit cards at year-end 1997. Last year, the nation's 151.9 million credit card holders owned an average of 9.1 cards with an average outstanding balance of $405 per card. 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. According to The Nilson Report, 2.95 percent of consumer debt was charged off as a loss in the U.S. in 1997, or about $1 out of every $34 owed. According to Create-A-Check, in 1997 there were about 496 million fraudulent checks written for a total of approximately $9.9 billion. This means that an average of 1.4 million fraudulent checks worth $27.3 million were written daily. The Scope of the Industry Professional, third-party collection agencies collected and returned more than $20.4 billion to the U.S. economy in 1996. According to ACA's 1997 Cost of Operations Survey, new accounts totaling approximately $122.3 billion was placed for collection with professional, third-party collection businesses in 1996. 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. The Role of ACA ACA has approximately 3,500 member agencies providing professional accounts receivable management services to over one million credit grantors. ACA serves members in the United States, Canada and 55 other countries worldwide. ACA members are required to comply with all federal and state laws and regulations, as well as the ethical standards and guidelines established by the organization. The Magnitude of Public Debt Government Collections: The Magnitude of Public Debt States, counties, municipalities and judicial districts are owed billions of dollars in debt, including taxes, fines, fees, benefit overpayments and student loans. At the end of fiscal year 1997, the federal government was owed $259 billion in non-tax debt. Of that total, more than 20 percent--$52 billion--is delinquent. Of that delinquent debt, 83 percent, or $44billion, is more than one year old. The U.S. General Accounting Office (GAO) estimates that the Internal Revenue Service is owed $110 billion in past-due taxes, of which $50-60 billion is deemed collectible A 1994 study by the GAO shows that the use of professional, third-party collectors by state governments boosted collection rates by as much as 45 percent. One state used private collectors to collect $2.9 million in 1992. A 1995 survey of 82 municipalities, 24 counties and 10 special districts by the Mercer Group, an Atlanta-based research firm, showed that privatizing debt collection increased by 100 percent since 1987. ACA research shows that 40 percent of federal agencies and 100 percent of states use the services of private debt collection businesses. The Debt Collection Improvement Act of 1996, which will rely heavily on private collectors, stands to further increase federal recovery. Since the Debt Collection Act was enacted in 1982, ACA members have collected more than $800 million for 35 federal agencies. In addition, private agencies have collected more than $1 billion for the Department of Education since 1978. Vice President Al Gore recommended the expanded use of private collectors in his National Performance Review report, September 1993. Under the Debt Collection Improvement Act of 1996, the Financial Management Service (FMS), a special unit within the U.S. Department of Treasury, is responsible for the more than $50 billion in non-tax debt owed to various federal agencies. The FMS awarded a contract for debt collection services to ten private sector collection agencies in September 1997. ACA's Government Services Program The Government Services Program (GSP) represents over 320 private collection agencies within the 3,600 member American Collectors Association. GSP members provide collection services to any level of government--from a city's overdue parking fines to delinquent federal loans and income taxes. GSP also assists members with obtaining contracts with county child support enforcement agencies and state revenue or education departments. GSP members are committed to working with governments to implement private sector collection techniques and account management systems. Private collectors bring experience, state-of-the-art computer technology and advanced collection techniques to government collection efforts. Source: American Collectors Association, Inc. ..............To return to other information articles, click here. ..............To contact us, e-mail info@able2collect.com As a professional bill collection agency, we successfully resolve debts for our clients. Click here to inquire about our unique affordable rates. We don't charge for services unless we're able2collect for you. Click here for 7 Free When to Collect Tips Able2Collect Collection Agency Rick Holohan, President PO Box 531 Utica, NY 13503-0531 Tel: 800-427-1112 US * 315-797-1223 Int'l Email: info@able2collect.com Web site: http://www.able2collect.com/