Americans’ apparent indifference to debt appears, at last, to be waning.

Data show that credit card balances are at their lowest level in a decade, a good sign that we either have more money at the end of the month or that we are beginning to realize that paying 20 percent interest on yesterday’s purchase isn’t great financial planning.

But the problem with debt is far from over, as a disturbing new study from the Urban Institute shows. More than 35 percent of Americans have been reported to credit agencies for unpaid debts, according to the institute.

Certainly some of those involve debts that are in dispute. But most are bills that Americans can’t or won’t pay.

The problem is particularly acute in the South and West, as you might expect. Credit is no less available in poorer areas of the country, but it comes with higher interest rates and more penalizing terms.

Of Dallas residents, 44 percent are receiving collection agency calls and visits. Imagine that. Almost half the people walking down the street are leaving themselves vulnerable to nasty letters in the mail or unwelcome phone calls.

The problem is a serious one. Being reported to a collection agency can have negative consequences on more than a person’s credit score. It can affect whether someone gets a job or qualifies for housing or student loans.

This phenomenon obviously most affects the poor and the least educated. And as an Associated Press article about the report noted, it isn’t necessarily the level of debt that an individual carries that translates to being under a collection agency’s watch.

In San Jose, Calif., for instance, the average person has almost $100,000 in debt, mostly from a mortgage. Yet few people in San Jose are being reported to collection agencies. In contrast, in the Texas border city of McAllen, the average person carries just $23,546 in debt. But more than half of people are facing collection agency queries.

Many of these debts are tied to medical bills. Older people and even younger people in poor health find themselves with crippling hospital bills that they simply can’t keep up with. It’s probably no surprise that McAllen, a center of collection activity, is also among the most expensive health care markets in the country, according to a report in The New Yorker.

There are no clear answers to this debt problem. We can hope that the fact that people are managing their consumer credit better is a positive sign that collection activities will decline over time as well. That depends, of course, on a strong economy and an improved job market with better wages for poorer Americans. And that’s far from guaranteed.

Meanwhile, the message of the debt collector is simple: Pay up now.

If only it were that easy.

Editorial by the Dallas Morning News

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