Recent reports reveal that credit card balances are at their lowest level in a decade, a good sign that Americans either have more money at the end of the month or 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 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 average debt, including home mortgages, for those living in Illinois ($53,353), Missouri ($47,214), and Iowa ($46,626) ranks below the national average of $53,850.
The study shows that the percentage of adults with debt in collection in West-Central Illinois, Northeast Missouri and Southeast Iowa ranks near the bottom nationally – generally at 8.1 percent or lower – so the problem isn't particularly acute here, but it does exist.
The South and West are the biggest trouble spots. Credit is no less available in poorer areas of the country, but it comes with higher interest rates and more penalizing terms.
And 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.
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.
The fact that people are managing their consumer credit better is a positive sign that collection activities could decline over time. That depends, of course, on a strong economy and an improved job market with better wages for poorer Americans.
However, wages have barely kept up with inflation during the 5-year recovery since mid-2009 from the Great Recession, according to Labor Department figures. A separate measure by Wells Fargo found that after-tax income fell for the bottom 20 percent of earners during the same period.
What that leaves us with is that there are no clear answers to this debt problem, but it is paramount that it be addressed.