Thirty-five percent of adults in the U.S. have a debt in collections reported in their credit files, a new study shows.

The study, by the Urban Institute, a think tank in Washington, D.C. found that Nevada tops the list of states, with 47 percent of people who have a credit file have reported debt in collections. The state, which was hit hard by the mortgage crisis, also has the highest average collections debt. The state also has the highest average collections debt, at $7,198.

Twelve other states (11 in the South) and the District of Columbia also top the 40 percent figure for the percentage of people who have a credit file that reports a debt in collections. They include Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, New Mexico, North Carolina, South Carolina, Texas and West Virginia.

On the low end, Minnesota, North Dakota and South Dakota have about 20 percent of residents with reported debt in collections.

The study, conducted with Encore Capital Group's Consumer Credit Research Institute, found that 77 million Americans owed an average of $5,200 in September 2013.

Debt in collections involves a nonmortgage bill—such as a credit card balance, child support obligation, medical or utility bill, parking ticket or membership fee—that has been reported so far past due that the account has been closed and placed in collections, often with a third-party debt collection agency. The debt can remain in a person's credit file for seven years. Some consumers become aware of collections debt only when they review their credit report.

The researchers analyzed a random sample of 7 million people with 2013 credit files. The roughly 9 percent of adults (22 million) with no credit file, who are generally low-income consumers, were not represented in the study.

Of the 100 largest metropolitan areas, five have at least 45 percent of people with collections debt: McAllen, Texas (51.7 percent); Las Vegas, Nev. (49.2 percent); Lakeland, Fla. (47.3 percent); Columbia, S.C. (45.2 percent); and Jacksonville, Fla. (45.0 percent).

Only six metro areas, none in the South, have less than a quarter of people with collections debt: Minneapolis—St. Paul, Minn. (20.1 percent); Honolulu, Hawaii (21.0 percent); Boston, Mass. (22.4 percent); Madison, Wis. (22.6 percent); San Jose, Calif. (23.0 percent); and Bridgeport, Conn. (24.5 percent).

Approximately 790 of the 72,000 census tracts studied for the report have at least 75 percent of adults with collections debt. Fewer than 10 have no one with such debt. Census tracts average about 4,000 residents.

"Most people wouldn't blink if told that the majority of Americans carry some debt,” said Caroline Ratcliffe, a senior fellow at the Urban Institute, in a statement. “But they would be shocked to learn that reported debt in collections is pervasive and threads through nearly all communities. Delinquent debt can harm credit scores, which can tip employers' hiring decisions, restrict access to mortgages, and even increase insurance costs."

Past Due
Some 5.3 percent of people with a credit file (roughly 10 million adults) are at least 30 days late on a credit card, auto loan, student loan, or other nonmortgage payment. The average amount needed to pay to become current on that debt is $2,258.

Debt past due is most pronounced in the South, led by Louisiana (8.7 percent), Texas (7.6 percent) and Mississippi (7.2 percent). Only three states have less than 4 percent of their credit file population with debt past due: Utah, Washington and New Jersey.

Across the largest 100 metropolitan areas, Salt Lake City, Utah, has just 3.2 percent of people with debt past due, followed by San Jose, Calif., and Seattle, Wash., each at 3.5 percent. At the other end of the spectrum are McAllen, Texas, at 10.1 percent, followed at about 9 percent by Texas's El Paso and San Antonio and Louisiana's Baton Rouge and New Orleans.

Of the nearly 1,000 census tracts with at least 15 percent of people with debt past due, nearly 40 percent are in Louisiana or Texas. Almost 4,600 of the nation's census tracts—scattered throughout the United States—have no one with past due debt.

Distribution of Debt
Average total debt in America stood at $53,850 in September 2013, among people with credit files, a second report indicates. Average debt among people with mortgages was $209,768, while it was $11,592 for those without mortgages.

In contrast to the situations involving debt past due and collections debt, five southern states—Mississippi, West Virginia, Arkansas, Louisiana, and Oklahoma—have the lowest levels of debt and tend to have low levels of debt relative to income. In general, low-debt areas tend to be low-income and less-populous locales.

Total debt, largely driven by mortgages, is high along the Pacific Coast in California, Oregon, and Washington and along the East Coast from Washington, DC, through Boston, Massachusetts. People in these areas may have higher debt because they have higher incomes or more assets, providing them with greater access to credit. Hawaii has the highest average mortgage debt ($67,300) and Mississippi has the lowest ($16,864).

The San Jose, Calif., metro area has the highest average debt in the country at $97,150. California is home to 4 of the 10 most-indebted areas. McAllen, Texas, at $23,546, has the lowest average debt.

The analysis shows that the size of mortgage and nonmortgage debt is often unrelated. Although the South has low levels of mortgage debt relative to income, it has high nonmortgage debt relative to income. California has high mortgage debt relative to income, but very low nonmortgage debt relative to income.

“Although household debt is a significant challenge for tens of millions of Americans, it has received surprisingly little attention compared to other financial matters,” said Christopher Trepel, chief scientific officer at Encore Capital Group and managing director of the Consumer Credit Research Institute. “This study establishes a new fact base from which to ask important questions related to consumer financial distress, and it advances our understanding of household balance sheets and the spatial patterns of debt holding in the United States.”

The research was conducted by Caroline Ratcliffe, Signe-Mary McKernan, Brett Theodos, and Emma Kalish from the Urban Institute and John Chalekian, Peifang Guo, and Christopher Trepel from Encore Capital Group's Consumer Credit Research Institute.