One of every seven Americans has a relationship with a debt collection agency, and families accumulate debt for a host of reasons. While many families take on debt to purchase a home or start a business, oftentimes the accumulated debt is less financially productive. Families can take on debt to meet basic needs and expenses when an unforeseen emergency arises (e.g., job loss or medical crisis) or to purchase items that they do not have the resources to cover (e.g., accumulate credit card debt). When families are unable to meet their payment obligations, they are at risk for moving from a virtuous cycle of asset accumulation to a vicious cycle of indebtedness. Their credit history and scores are adversely affected, their debt may go into collection, and they may ultimately lose property and future financial opportunities.

Nationally, average family debt increased from $91,000 in 2004 to $102,000 in 2007 and then fell slightly to $98,000 in 2010, remaining above its 2004 level. Average family assets also increased between 2004 and 2007 (from $608,000 to $685,000) but then fell dramatically in 2010 to $593,000 – well below the 2004 level. These national averages however, mask important differences across demographic areas and individuals.

This paper uses unique individual-level credit bureau data to identify the determinants of household total debt, as well as households’ major components of debt—mortgage, student loan, auto loan, and credit card debt. Our credit bureau data offer a detailed look at the debt side of people’s balance sheets, including measures of financial distress, such as amount of debt past due and amount of debt in collections for the 2013-2014 time period.

We present both descriptive and multivariate regression results. The descriptive analyses show the geographic distribution of debt for total debt and the components of debt. U.S. maps of debt down to the census-tract level allow us to effectively describe the geographic distribution of debt. Our regression analyses examine the extent to which debt—as measured by total household debt, credit card debt, debt in collections, etc.—is explained by local-area (census tract) demographic characteristics (e.g., race/ethnicity, educational attainment, immigrants), which we use as a proxy for peoples own demographic characteristics. We also examine how debt relates to local-level economic characteristics (e.g., income, employment, poverty).

The results from this paper add to the complex picture of family balance sheets and their financial stress. In doing so, the paper highlights different debt profiles, identifies characteristics of high debt and financially distressed households, and sets the stage for a discussion of their implications.