Americans appear to be going back to their pre-pandemic borrowing habits, causing total U.S. household debt to hit a record $15.24 trillion over the summer, according to a November report from the Federal Reserve Bank of New York. All main sources of credit — mortgages, auto loans, student loans, and credit card balances — are headed toward, or have surpassed, pre-pandemic levels.
But reviewing the economic health of households during the high point of the coronavirus pandemic in 2020 shows that Americans took some of that pandemic-related emergency stimulus money and paid down some of their debts.
The result? From February to October 2020, mortgage delinquencies declined and credit scores increased. The share of people with debts in collection declined slightly, while the median amount of debt in collection increased by only $16, to $1,849, according to nonprofit think tank Urban Institute.
Debt in collection occurs when a creditor, such as a credit card issuer, writes off the debt as a loss after a certain period of non-payment, typically after 180 days, and sells it to a collection agency. The borrower’s credit score then tanks, and the stressful calls from the collection agency begin.
To identify the 50 counties where debt in collection increased the most during COVID-19, 24/7 Wall St. ranked counties by the change in median debt in collection from February 2020 to October 2020 using data from the Urban Institute’s report, “Credit Health During the COVID-19 Pandemic.” Only 2,225 counties with data were considered.
The amount of debt in collection varies geographically, but it’s typically higher in low-population areas with a sizable number of low-income earners and fewer local job opportunities relative 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 residents located 230 miles west of Salt Lake City, saw a $1,090 increase in median debt in collection from February to October 2020, to $3,754. About one in every five residents — with a credit bureau record — of this northern Nevada county had debt in collection. (Find out the counties with the most medical debt in collections.)
Median debt in collection ranged from $1,765 in Kingfisher, Oklahoma, to $3,989 in Callahan, Texas among the counties that saw household debts increase considerably.