LAS VEGAS (KTNV) — Imagine answering your phone only to hear a debt collector demanding payment. For thousands of Nevadans, this is an everyday reality.
A recent WalletHub report ranks Nevada third in the nation for bad debt collections, signaling that many residents face financial hardship. Experts say this issue is not just about unpaid bills; it’s about long-term consequences that can affect credit scores, economic stability, and even future homeownership.
Unpaid debt can quickly become a major financial setback. Las Vegas poker dealer Vernon Bigham knows the burden of collections all too well.
"Yes, there was a time in my life that I had stuff in collections," Bigham shared. "I had some medical things and things when I was young."
What starts as a missed payment can rapidly escalate into persistent calls from debt collectors, lower credit scores, and years-long financial obstacles.
"I had to let some things go, it was just part of the process," Bigham recalled. "It took me a while to recover from that."
According to WalletHub, the average Nevadan has three accounts in collections, with an average balance of $1,673 per account. The state also saw the 13th-highest increase in debt balances compared to last year, making it one of the hardest-hit regions in the country.
"Nevada has done progressively worse since the last comparison," said WalletHub analyst Chip Lupo.
"The average balance has increased from a year ago, making it even more challenging for people to get back on track."
WATCH | Shakeria Hawkins spoke with WalletHub analyst Chip Lupo to get a better understanding of what happens to your debt once it is sold to a collections agency, what steps you can take, and how this all affects you.
Once a person falls behind on payments, creditors typically attempt to contact them for up to six months, offering payment plans or reminders. But if the debt remains unpaid for 180 days, creditors will sell the account to a collection agency and that's when the real trouble begins.
"Once an account has gone dormant for 180 days, creditors will sell that account to a collection agency," Lupo explained.
Once in collections, the debt can remain on a credit report for up to seven years, even if it’s eventually paid off.
What Can You Do to Avoid Collections?
Experts emphasize that communication is key to avoiding the debt spiral.
"If you’re a little bit behind on your bills, reach out to your creditors and see if you can make some kind of arrangement," Lupo advised.
In many cases, people may be able to negotiate a smaller payment amount, lower their interest rate, or temporarily pause payments through financial hardship programs.
"Most creditors have a financial hardship department where you can explain your situation," Lupo said.
"Taking proactive steps can help prevent your debt from being sent to collections."
For Nevadans already facing collections, Lupo says it's possible to recover and rebuild credit scores but it requires proactive financial planning.
"The best way to avoid collections is to be proactive, review your finances, check your credit report, create a budget, and stick to it," he said. "If you do fall behind, reach out to creditors early and make good-faith efforts to pay."
For Bigham, staying on top of payments has become a priority, especially as he works toward buying his first home.
"I’m in the process of buying a house," he said.
There are options. Many creditors offer financial hardship programs, and debt consolidation services can help people manage multiple payments more effectively.
The key takeaway? You have more control than you think. If you’re struggling, reaching out sooner rather than later could help prevent years of financial stress.
