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Show Page eighteen Debts Continued from page one Ten years later, the monthly figure was up to $318 million and in 1976 it tallied $325 million per month. The national association adds that recovery rates are dropping at the same time, from 25 percent in 1975 to 23.8 percent in 1976. Were just says treading water, association official Irvin Mortensen. Limit Agencies Options The rate is going down, says Connelly, because consumer groups are getting laws passed to limit agencies' options in collecting deliquent We dont dare take a step without consulting a lawyer these days, he and the thats making says, and costlier. slower process accounts. Many debtors are up on consumer protection laws, he adds, and just laugh in our faces when were after a bad debt. Then too, some companies hold on to their bad debts so long they're just about uncollectable. Connellys figures place a 10 percent recovery rate on debts that are one year old. On debts less than 90 days old, he figures a recovery rate of 50 percent. Bad Money Management Wayne Green, owner of an Ogden collection agency, attributes the growing number of bad debts to bad money management in the face of rising inflation. While disposable income has gained by 34 percent in the past four years, he points out, that amounts to only three percent in terms of inflated dollars. The trouble is, people are not compensating for the increased prices in their necessary expenses. They assume that because theyre making so much more money, they should be entitled to more purchases, discretionary he says. The resultant bad debts have little to do with occupation and salary levels, according to a survey by the American Collectors Association. Construction workers, factory workers and laborers make up a combined 29 percent of debtors whose accounts are turned over to collection agencies. Government employees account for another nine percent, which Connelly attributes to government workers knowledge that their wages can't be garnish- ed. But try owing the government some money, he adds. Uncle Sam will come take your house. The survey identified strikes, loss of overtime and shorter work weeks as major hurdles for many debtor families, who then have trouble reducing spending ceilings. |