These states have the most people in financial distress, based on credit scores, bankruptcy filings and more
FILE-A homeowner sorts through the rising monthly bills, June 26, 2024 in borough of Brooklyn, New York City, New York. (Photo by Andrew Lichtenstein/Corbis via Getty Images)
There are a myriad of factors that can cause misery for Americans related to finances, whether its their monthly bills, credit card debt, or inflation.
No matter the circumstances that people may endure when it comes to their money, WalletHub delves further into the causes of financial distress for Americans by ranking states where this is prevalent.
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Data for the study was gathered by comparing 50 states in six categories: credit score, people with accounts in distress, average number of accounts in distress, change in number of bankruptcy filings comparing September 2023 to September 2024, "debt" search interest index, and "loans" search interest index.
WalletHub defines an account in financial distress as one that is either in forbearance or has its payments deferred. The personal finance website then determines the average using its criteria to calculate an overall score for each state and uses the resulting scores to rank-order the states.
Top states with the most financial distress
- Texas
- Louisiana
- Nevada
- Kentucky
- Florida
- Tennessee
- Mississippi
- Oklahoma
- South Carolina
- Arizona
- Georgia
- New York
- North Carolina
- Alabama
- Michigan
- Delaware
- Colorado
- Virginia
- Rhode Island
- California
What to know about the top three financially distressed states
Texas
Texas ranks first as the state with the most financial distress, due to 8.2% of the residents with at least one credit account in forbearance or with deferred payments in the third quarter of 2024, which is the third-highest percentage in the nation.
RELATED: Cities where Americans are under the most financial stress
According to WalletHub, the state also has the sixth-highest year-over-year increase in the share of individuals in financial distress.
Residents also had an increase of 25.8% in non-business bankruptcy filings in the past year, representing the seventh-highest increase in the U.S.
Additionally, Texas residents also search Google for "debt" and "loans" more than people in the majority of other states, which WalletHub notes shows that many individuals are desperate to borrow, despite already owing money.
Louisiana
Louisiana is the second-most financially distressed state in the country. In the third quarter of 2024, approximately 11.6% of the state’s residents had roughly one credit account in financial distress, which WalletHub explains happens when the account holder is temporarily allowed not to make payments due to financial difficulty.
However, residents in financial distress had a slight year-over-year decrease, falling by 0.8%. According to WalletHub, Louisiana residents have the third-lowest average credit score in the U.S., at 624, which is in the substandard credit range.
And many Louisiana residents are pondering using loans to pay their bills, considering that the state ranks second among the 50 states in Google search volume for "loans."
Nevada
In Nevada, roughly 7.5% of residents have at least one credit account in forbearance or with deferred payments. The state also has the eighth-largest spike in non-business bankruptcy filings over the past year, at 24.3%,
WalletHub noted that these factors have contributed to the state’s residents having the 15th-lowest average credit score in the U.S., at 644, which is near the bottom of a fair credit range. Moreover, Nevada residents are still looking to borrow more, with the fourth-highest Google search interest for "debt" and the eighth-highest interest in loans.
To see the complete list of rankings and where your state ranks, click here.
Middle-class Americans admit to financial struggles
In a separate poll conducted in June 2024, a majority of middle-class Americans say they are "struggling financially" and expect that to continue for the rest of their lives.
The poll revealed that 65% of Americans considered "middle class" – or those earning above 200% of the federal poverty level – are facing financial hardship. That’s about $62,300 for a family of four, FOX Business reported.