Where Ohio Debt Ranks
Ohio’s economy continued a steady recovery in 2016 as the state added new jobs to replace some of those lost during the dramatic decline of the its once dominant manufacturing sector.
Service-, retail-, hospitality- and transportation-industry jobs are gradually replacing the thousands of auto and steel industry job lost since the 1980s. The state unemployment rate of 4.7% in August 2016 was the lowest in years, and as more Ohioans have money to spend, the housing market has begun to recover.
Economic forecasts suggest home sales will continue to rise in the near term as a tightening labor market sparks income growth. As in other regions, low mortgage interest rates and a gradual loosening of underwriting requirements are helping more people buy homes. Housing continues to be very affordable compared to other parts of the country.
Despite improving conditions, Ohio is still a Rust Belt economy, with more people moving out of the state than moving in. It ranks 12th among states for per capita bankruptcy filings, suggesting a large number of Buckeyes might benefit from credit counseling and debt-management advice. Ohio, the nation’s seventh most populous state, continues to struggle with an economy that is gradually adapting to a dramatic, multi-decade loss of manufacturing jobs and a migration of workers out of the state.
Ohioans with financial problems have an advantage others don’t: The state has a strong set of consumer protection laws. These go far beyond federal laws and work to extend and enforce consumers’ rights.
Credit Card Debt in Ohio
Ohio’s average credit card balance was about the same as the rest of the country in mid-2016. Transunion, one of the nation’s three large personal credit rating agencies, reported that at the end of the second quarter average consumer card balance in the state was $4,933 compared to the nationwide average of $5,247. The averages reflect all card accounts, not just those with balances.
Ohio homeowners had an average of $125,359 in mortgage debt at the end of the first half of 2016, compared to the national average of $192,749. The Ohio mortgage loan balance increased 0.8 percent from the same time in 2015, about a third of the average national increase.
In both Ohio and the entire country, mortgage delinquency rates fell in 2016, signifying improving financial health among mortgage-holders. At the end of the second quarter of 2016, 2.2 percent of Ohio mortgages were 60 days or more late. This is down from 13.6 percent a year earlier.
Nationwide, 2.3 percent of mortgage loans were more than 60 days delinquent in June 2016, a decline of 18 percent from the same time in 2015.
Student Loan Debt
Ohio ranks 9th among the states for student loan debt, with 67 percent of the state’s college graduates holding a debt from their days in school.
The average Ohio student loan debt stood at $29,353 in 2014, according to The Institute for College Access & Success’ Project on Student Debt report. The student-debt load increased 53% during the decade beginning in 2004, rising from an average of $19,182.
The increase came during a period of steeply increased higher education costs. As the number of college graduates with student loan debt has increased, academic debt has become a front-burner political issue. Even states with strong public university systems have been criticized for not doing enough to offset rapid inflation in college costs. The 2014 Project on Student Debt report found that state funding of public universities and colleges nationally fell 12% over the 2004-2014 period, while academic institutional per-student revenue coming from tuition increased 43%.
Though student loan debt generally can’t be discharged through bankruptcy, credit counseling and debt management programs can help those with large debts create plans to deal with what has become a burden on many households.
Personal bankruptcy filings spiked in Ohio just before the Great Recession. Though filings were up throughout the country, they rose even more steeply in Ohio. The state already was suffering from a steep decline in the manufacturing sector and the job loss that accompanied that.
In recent years, the bankruptcy wave has receded. During the first eight months of 2016, nearly 25,000 Ohioans filed for personal bankruptcy, down 2% from a year earlier. The state ranks 12th in the nation for per capita filings.
Credit Scores in Ohio
Ohioans have an average credit score of 631 at the end of 2015. That score is based on the FICO model, which ranges from 300 (worst) to 850 (best). The state’s average is only slightly below the nationwide average of 634. Still, this is a significant downturn; in 2009, the state’s average score was between 680 and 690.
The decline is likely a result of irresponsible bill-paying. Missing payments or making late payments can significantly alter a consumer’s credit score.
Consumer Fraud and Identity Theft
Ohio has an average number of complaints compared to the rest of the nation when it comes to identity theft as well as consumer fraud, an umbrella term that includes misleading activities and unfair practices such as false advertising and pyramid schemes.
In 2014, there were 506.3 consumer fraud complaints per 100,000 Ohioans, and 58,700 total complaints, ranking Ohio 27th in the country, according to the Federal Trade Commission. The state also ranked 20th for identity theft, a type of fraud that involves stealing personal consumer information. There were 79 identify theft complaints per 100,000 people for a total of 9,161.
Two of the state’s metropolitan areas ranked in the top 50 in the nation for fraud and other types of consumer complaints. Weirton-Steubenville metro area, which straddles Ohio and West Virginia, was No. 4 in the nation, based on the number of consumer fraud complaints per 100,000 people, with 796 complaints, or 652.5 per 100,000 residents. The Cleveland-Elyria metro area ranked 36th, with 9,712 complaints, or 470.4 per 100,000 residents.
Identity theft complaints in Ohio cities are relatively low. Only one metropolitan area, Cleveland-Elyria, made the top 50 list, and it placed 50th with 2,155 complaints, or 104.4 per 100,000 residents.
Ohio State Laws on Consumer Debt
Ohio has ample consumer protection laws, which contribute to residents’ overall financial well-being. Some Ohio laws reinforce and reiterate federal laws. Others go much further than nationwide protections, adding to consumer rights within the state.
Statute of Limitations
Ohio’s statute of limitations is six years regardless of the type of debt. The time limit is counted from when a debt became overdue or when a borrower last made a payment, whichever happened more recently. If it’s been more than six years, a creditor cannot sue a debtor for debt collection purposes.
Consumer Sales Practices Act
The Consumer Sales Practices Act of 1972, much like the Federal Trade Commission Act, protects consumers against unfair actions surrounding transactions. The act states that a seller cannot do anything deceptive or unfair in connection with a transaction. For example, a seller cannot imply that the item for sale is of higher quality than it is, and he or she cannot falsely state that the product a customer already owns is in need of repair or replacement.
The act goes on to ban sellers from taking part in unconscionable acts, which are more serious and exploitive.
Acts that would be considered unconscionable include the following:
- Deliberately taking advantage of a buyer’s illiteracy, handicap or language barrier.
- Selling a product for a substantially higher price than the price that similar customers received.
- Allowing a customer to take out a loan that he or she cannot reasonably repay in full.
The overarching state law also outlines regulations for specific types of transactions such as mortgages and deposits, and it lists the standard duties and abilities of the attorney general. These aspects are generally in line with laws in other states and federal regulations.
Credit Card Laws
Ohio has two laws that outline consumers’ rights to privacy in regard to their personal credit cards. These laws are in line with federal laws.
The Credit Card Truncation Act of 1993 makes it illegal for sellers to disclose consumers’ credit card account numbers, Social Security numbers, expiration dates or other key financial information.
The Credit Card Recording Act of 2004 has a similar purpose. It states that sellers cannot print expiration dates of credit cards or more than five digits of a credit card number on receipts.
Credit Services Laws
Ohio has two laws governing the fairness of businesses and nonprofit organizations that offer debt counseling, credit repair and related services.
The Credit Services Organization Act of 2004 requires such companies to register with the state and gives consumers three days to cancel related contracts.
The Debt Adjusters Act of 2004 is similar. It requires these organizations to file annual financial statements and maintain separate bank accounts for their clients. It also caps these businesses’ fees. Initial consultations can cost no more than $75, and companies cannot charge more than $100 annually for consultation fees. Ongoing services such as debt management programs cannot cost more than $30 per month or more than 8.5 percent of a client’s monthly payments to the program, whichever is greater.
Ohio has several other consumer protection laws to help residents hold onto their money and receive fair treatment, including:
- The Credit Freeze Act of 2008 is the state’s version of a nationwide law that allows a consumer to place a freeze on his or her credit reports to protect the consumer after his or her personal information has been stolen or compromised.
- The Gift Card Act of 2006 states that most gift cards must be valid for at least two years from their issue dates.
- The Homebuyer’s Protect Act of 2007, also called the Predatory Lending Law, states that non-bank lenders, mortgage brokers and loan officers cannot take part in abusive lending practices.
- The Home Solicitation Sales Act of 1973 grants customers three days to cancel transactions made outside of the seller’s place of business, such as in the customer’s home.
- The Prepaid Entertainment Contracts Act of 1976 gives customers three days to cancel contracts with dance studios, dating agencies, diet centers, health spas and martial arts schools.
- The Retail Installment Sales Layaway Arrangements Act of 1992 allows customers to cancel layaway agreements. It also requires sellers to notify customers before they default on layaway contracts.
- The Security Breach Notification Act of 2006 requires sellers to notify their customers if there has been a security breach that puts customers at risk for identity theft.
- The Short-Term Lender Law of 2008, or the Payday Lending Law, limits the interest rate on payday loans to 28 percent.
About The Author
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].
- Federal Reserve Bank of New York (2012). Household Credit. Retrieved from http://data.newyorkfed.org/creditconditions/
- Skowronski, J. (2011). The Most Debt-Ridden Cities. Retrieved from http://finance.yahoo.com/news/pf_article_111979.html
- Columbus Business First (2012). Mortgage delinquency rates falling in Ohio. Retrieved from http://www.bizjournals.com/columbus/news/2012/08/08/mortgage-delinquency-rates-falling-in.html
- The Project on Student Debt (2015). State by State Data. Retrieved from http://ticas.org/posd/map-state-data-2015
- Martin, A. & Lehren, A.W. (2012). A Generation Hobbled by the Soaring Cost of College. Retrieved from http://www.nytimes.com/2012/05/13/business/student-loans-weighing-down-a-generation-with-heavy-debt.html?pagewanted=all
- American Bankruptcy Institute (2012). Bankruptcy Filing Statistics – Filings by State. Retrieved from http://www.abiworld.org/AM/Template.cfm?Section=Filings_by_State1&Template=/TaggedPage/TaggedPageDisplay.cfm&TPLID=61&ContentID=36299
- United States Census Bureau (2012). State and County QuickFacts. Retrieved from http://quickfacts.census.gov/qfd/index.html
- Rivers, J. (2009). Financial Responsibility in the United States. Retrieved from http://www.billshrink.com/blog/3995/average-credit-scores-by-state/
- Federal Trade Commission (2015). Consumer Sentinel Network Data Book. Retrieved from https://www.ftc.gov/system/files/documents/reports/consumer-sentinel-network-data-book-january-december-2014/sentinel-cy2014-1.pdf
- Bankrate (2012). State statutes of limitations for old debts. Retrieved from http://www.bankrate.com/finance/credit-cards/state-statutes-of-limitations-for-old-debts-2.aspx
- DeWine, M. (2011). Consumer Sales Practices Act. Ohio Attorney General. Retrieved from http://www.ohioattorneygeneral.gov/getattachment/718c8d3c-6e05-401f-a08a-bd6de5d59694/Consumer-Sales-Practices-Act.aspx
- Ohio Attorney General (2012). Laws Protecting Consumers. Retrieved from http://www.ohioattorneygeneral.gov/ConsumerLaws.aspx/
- NA, ND, Northwest Ohio Market Outlook (2016, Second Quarter). Retrieved from: Federal Reserve Bank of New York (2012). Household Credit. Retrieved from: https://www.pnc.com/content/dam/pnc-com/pdf/aboutpnc/EconomicReports/Regional%20Economic%20Reports/NortheastOhio_2016Q2.pdf
- NA. (2016, August) August 2016 Bankruptcy Statistics – State and District. Retrieved from: http://www.abi.org/newsroom/bankruptcy
- You will need Adobe Reader to view the PDF Download Adobe Reader