What collection debt looks like in America: a mid-year look

In April 2025, Freedom Debt Relief reviewed data from tens of thousands of people actively looking for help with their debt. The numbers might surprise you.

• About one in four has at least one account in collections. 

• The average collection balance is over $3,000

• Most debt relief seekers have multiple overdue accounts

• Many are still using their credit cards, despite struggling with high balances and maxed-out cards. 

We dug deeper to surface the most revealing truths. This report examines debt collection in the U.S. It shows which states have the most debt and what this means for American families' finances.

What Is a Collection Account?

A collection account is a debt your original creditor has sold to a debt collection agency. Creditors, like banks or credit card companies, usually send your account to collections if payments are late for 120 or 180 days.

It’s sometimes a good idea to pay off a collection account in full. If that’s not possible, you have other options. For example, you could negotiate with debt collectors yourself, or join hands with a debt settlement company that bargains with a debt collector for you. 

Collection Debt by the Numbers: the National Picture

In April 2025, about one in four people looking for debt relief have at least one account in collections. The average collection balance is $3,027, spread across nearly one to two collection accounts.

Signs point to financial issues being tied to credit card debt. If you’re looking for debt relief, you have an average of 14 open tradelines, including more than five credit cards and $8,500 in credit card debt. 

Furthermore, if your financial picture matches that of the average American with debt in collections, your average credit utilization rate is 89%. Having credit cards that are maxed out (or close to it) is a red flag. You could be leaning too heavily on credit, probably since before your accounts went to collections.

The 5 States With the Highest Collection Balances

Check out how your state stacks up to the average collections debt figure. The table below highlights the five states with the highest average balances among people seeking debt relief in April 2025.

Collection accounts by state

Biggest debts

The Golden State takes the cake for most expensive debts. California tops the list, with an average collection balance of $4,513. However, only 16% of people in the state have an account in collections.

More debt relief seekers in collections

In contrast, Nevada and Kansas have significantly higher proportions of people with debt in collections—27% in both states—and sizable average balances over $3,900. 

Highest number of collection accounts

More than one debt in default: Montana and Kansas showed the highest average number of collection accounts per person, with 2.4 and 2.3 respectively. 

These patterns point to different types of risk across states. In some places, fewer people have accounts in collections, but the ones who do owe more. In others, collections are more widespread, with people juggling multiple delinquent accounts.

Credit card debt and utilization

Credit card debt and collection accounts are like two peas in a pod, closely linked. Most of the debt relief seekers in this analysis have high credit card balances, often maxed out.

This is because credit cards are typically the first resource for when you don’t have enough in the bank to pay bills. Over time, carried balances build interest. Sometimes, you fall behind. Your credit card debt could then be sold to collection agencies.

Of those surveyed, the table below highlights the average credit card balance by state.

Of those looking for debt relief, credit card balances are high. Across the board, credit card balances range from just over $8,000 to nearly $10,000. 

Owning multiple cards is the norm. The average person in each state has around five open credit cards, and utilization is extremely high—between 88% and 92%. 

These numbers show that before you default on debt, you probably rely a lot on credit for daily expenses or emergencies. For many, collections may have been the result of an already maxed-out financial situation.

Spotlight: What Collection Debt Looks Like in California

Spotlight: What Collection Debt Looks Like in Kansas

Spotlight: What Collection Debt Looks Like in Montana

Spotlight: What Collection Debt Looks Like in Idaho

Spotlight: What Collection Debt Looks Like in Nevada

Collection and credit card debt by age group

Let’s dig deeper into collection accounts to sort debts by age. Despite some overlap, older and younger Americans have very different situations.

Balance sizes peak in middle age. People ages 36–50 have the highest collection balances, owing more than double the average of most other groups. At this age, you’re likely to reach the point where you spend big bucks on housing and kids.

Meanwhile, older adults (51–65 and 65+) have the highest credit card balances, but lower collection balances. That could reflect more available credit and a better payment history. 

Younger people (18–25) show very high utilization (96%) even though their balances are relatively low—suggesting they’re maxing out low credit limits. It’s easier to max out cards when you’re capped at $1,000, a relatively low credit line.

Monthly payment amounts rise with age and peak in the 51–65 group—consistent with higher income or credit limits. At this age, some might also have a strong resolve to start paying down those balances.. 

Tips To Deal With Debt in Collections

When dealing with debt in collections:

• Check your credit reports. Verify information reported by credit collectors is valid and true, and report errors.

• Understand your rights. The Fair Debt Collection Practices Act (FDCPA) protects you from debt collectors who would lie to or harass you.

• Explore debt resolution. Debt resolution could be ideal when you can’t afford to pay a debt in full.

At Freedom Debt Relief, we understand your situation is unique. Feel free to give us a call to discuss next steps—whether that be debt resolution or a better financial opportunity.