Financial challenges—ranging from mounting debt to inflation and stagnant wages—are affecting millions of Americans. A new study by WalletHub ranks the states where residents experience the highest levels of financial distress.

The study analyzed six factors to identify trends in financial hardship, including:

• Average credit scores
• Percentage of accounts in financial distress
• Average number of distressed accounts
• Year-over-year changes in bankruptcy filings
• Google search interest in terms like “debt” and “loans”

Financial distress was defined as having accounts in forbearance or with deferred payments, indicating financial instability.

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Top 20 States with the Most Financial Distress

1. Texas
2. Louisiana
3. Nevada
4. Kentucky
5. Florida
6. Tennessee
7. Mississippi
8. Oklahoma
9. South Carolina
10. Arizona
11. Georgia
12. New York
13. North Carolina
14. Alabama
15. Michigan
16. Delaware
17. Colorado
18. Virginia
19. Rhode Island
20. California

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Spotlight on the Top Three Financially Distressed States

1. Texas

• Financial distress prevalence: 8.2% of Texans have at least one credit account in forbearance or deferred payment, the third-highest rate in the nation.
• Bankruptcy filings: Non-business bankruptcies surged by 25.8% in 2024, the seventh-highest in the U.S.
• Google search trends: Texas ranks high for searches related to “debt” and “loans,” signaling widespread concern about borrowing and repayments.

2. Louisiana

• Financial distress rate: 11.6% of Louisiana residents have at least one credit account in distress.
• Credit scores: The state holds the third-lowest average credit score nationally, at 624 (substandard credit range).
• Loan searches: Louisiana ranks second for searches about loans, reflecting significant financial struggles.

3. Nevada

• Bankruptcy trends: Non-business bankruptcy filings rose 24.3% over the past year, the eighth-highest increase nationally.
• Credit scores: Nevada residents average a 644 credit score, near the lower end of the “fair” credit range.
• Borrowing concerns: The state ranks fourth in Google search interest for “debt” and eighth for “loans,” indicating an ongoing desire for financial relief.

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National Insights on Financial Struggles

A separate 2024 poll revealed that 65% of middle-class Americans—earning roughly $62,300 annually for a family of four—admit to struggling financially. Many respondents believe their financial hardship will persist throughout their lifetimes.

Experts highlight that middle-class families, once the backbone of the economy, now face challenges from rising living costs and wage stagnation, forcing many into financial insecurity.

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For the full ranking and state-by-state breakdown, visit WalletHub’s report here.

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