Thirty-five percent of adults have a debt in collections reported in their credit files, an Urban Institute study shows.

While this is cause for concern, it may largely be an aftereffect of the recent recession.

“The depth and duration of the Great Recession left many out of work and/or underemployed— and that contributed to a huge surge in defaults— reflected in ongoing collections,” says Mike Schenk, CUNA’s interim chief economist.

A debt in collections involves a nonmortgage bill— such as a credit card balance, child support obligation, or medical or utility bill—that’s reported so far past due that the account has been closed and placed in collections, often with a third-party debt collection agency. This debt can remain in a person’s credit file for seven years. Some consumers become aware of collections debt only when they review their credit report.

The financial health of many households, however, is improving. Unemployment has declined, the stock market is trading near highs, and home prices have rebounded.

“These improvements have translated to substantial declines in loan delinquencies and defaults—with both banks and credit unions now reporting levels in these measures that are near pre-recession norms,” Schenk says.