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Which States Have the Most Americans Experiencing Financial Distress?

For Americans’ finances, with inflation, fluctuating unemployment, public health crises, and natural disasters, it is becoming hard for people across the country to pay their bills.

Many people have ended up in financial distress, according to a new WalletHub report, defined as having a credit account that is in forbearance or has its payments deferred—meaning the account holder is temporarily allowed to not make payments due to financial difficulty.

To shed light on the financial troubles experienced by people across the U.S. and show where those difficulties are most pronounced, WalletHub compared the 50 states and the District of Columbia across nine key metrics.

The data set includes factors like the average credit score, the change in the number of bankruptcy filings between September 2022 and September 2023, and the share of people with accounts in distress.

“Financial distress can be a vicious cycle. People who can’t make payments on their accounts end up damaging their credit scores, which in turn makes it more difficult for them to qualify for the best solutions to their debt,” said Cassandra Happe, Analyst at WalletHub.

Top 10 States with the Most People in Financial Distress:

  1. Louisiana (Overall score: 50.44)
  2. Mississippi (48.56)
  3. Texas (45.25)
  4. Tennessee (45.06)
  5. Nevada (43.66)
  6. South Carolina (42.41)
  7. Alabama (42.41)
  8. District of Columbia (42.35)
  9. Georgia (40.65)
  10. Kentucky (40.65)

Top 10 States with the Least People in Financial Distress:

  1. Wisconsin (Overall score: 26.05)
  2. Connecticut (26.01)
  3. Montana (23.88)
  4. New Mexico (23.72)
  5. Wyoming (23.24)
  6. New Jersey (22.75)
  7. Rhode Island (22.57)
  8. Maine (21.75)
  9. Massachusetts (21.59)
  10. New Hampshire (20.54)

In-Depth Look at the Most Financially Distressed States

Louisiana — The Bayou State

Louisiana is the state where people are in the most financial distress, which makes sense given that it’s extremely vulnerable to natural disasters and has the second-highest poverty rate in the country. Around 11.6% of Louisianans have a credit account where they have temporarily been allowed to not make payments due to financial difficulty, the highest percentage in the U.S.

Being late on payments unfortunately hurts people’s credit scores in the Bayou State. The average credit score in Louisiana is 642, the third-lowest in the country, according to WalletHub’s proprietary data. That’s only just above the threshold for fair credit, at 640.

Mississippi — The Magnolia State

The state in the second-most financial distress is Mississippi, in part due to the fact that it’s the state with the highest poverty rate, at over 19% according to the latest Census data. Poverty naturally makes it difficult for people to pay their bills, and Missisippians search Google for “loans” more than people in any other state. This is a sign of underlying financial problems that contribute to the state’s residents having the lowest average credit score in the country, at 634. That’s in bad credit territory, but close enough to fair credit to get there with a few months of responsible credit use.

Texas — The Lone Star State

Texas is the state experiencing the third-most financial distress, which might seem counterintuitive, given that Texas is the eighth largest economy in the world, with a bigger GDP than most countries. However, Texans are having a number of economic struggles, including an increase of more than 21% in non-business bankruptcy filings in the past year. Nearly 7% of the state’s residents have an account in forbearance or with deferred payments, too, which is in the top 10 in the U.S.

The average credit score in Texas is in the fair credit range, though, at 661. While residents aren’t in danger of slipping into the bad credit range, they still have nearly 40 points to improve before they can reach good credit.

Change in the Share of People with Accounts in Distress October 2023 vs. October 2022:


  • Vermont
  • Hawaii
  • Illinois
  • Nevada
  • California


  • New Hampshire
  • Missouri
  • Delaware
  • District of Columbia
  • Iowa

Change in Bankruptcy Filings September 2023 vs. September 2022:


  • District of Columbia
  • Oregon
  • New York
  • Texas
  • Maryland


  • Maine
  • Rhode Island
  • Wyoming
  • Vermont
  • New Mexico

“If you are in financial distress, some of the best options to pursue are debt settlement, debt management and free credit counseling. If your credit score hasn’t been damaged too much yet, you may be able to save a lot of money through debt consolidation,” said Happe.

To read the full report, including more data, charts, and methodology, click here.