Delinquent Debt

"I'm tapped out, Marv. American Express has got a hit man looking for me."
--Bud Fox (Wall Street)

New report indicates that about 77 million Americans have debt in collections. That's about 35% of poeple with credit files.

In the collection cycle for unsecured debt, the collections phase occurs when payment is more than 180 days past due.

At this stage, debt is charged off by the creditor. The creditor can subsequently sell the charged off accounts to debt buyers, attempt to collect via in-house or third party collectors, and/or warehouse the defaulted account.

Wondering about the extent to which moral hazard influences decisions by both creditors and debtors in this process.