The economy has felt like a rollercoaster lately. Between inflation eating into grocery budgets and interest rates climbing, staying on top of finances is tougher than ever. For those of us balancing mid-career responsibilities, saving for a child's college tuition, or eyeing retirement on the horizon, financial stability isn't just a goal—it's a necessity. We value reliability and practical planning, but sometimes broader economic forces hit home harder depending on where we live.
A recent study by WalletHub analyzed financial distress across the nation to pinpoint where Americans are struggling the most. They looked at key metrics like credit scores, the number of accounts in distress (meaning payments are deferred or in forbearance), and bankruptcy filings. The results offer a clear picture of the economic landscape in 2025.
If you are mapping out your financial future, knowing the economic climate of your state is insightful. Here are the 15 states currently facing the highest levels of financial distress.
1. Texas
Total Score: 62.45
Distress Rank: #1
Texas takes the top spot, which might surprise some given its massive economy. However, the data reveals significant underlying struggles for residents. Texas ranks 6th for the increase in bankruptcy filings year-over-year. Even more concerning, it holds the 8th spot for the share of people with accounts in distress.
For Texans planning for the future, this suggests a volatile environment where debt is becoming harder to manage. High search volumes for "debt" and "loans" indicate that many residents are actively seeking relief. If you live here, prioritizing an emergency fund is a practical move to insulate yourself from state-wide economic tremors.
2. Florida
Total Score: 61.52
Distress Rank: #2
The Sunshine State is facing some stormy financial weather. Florida ranks #1 in the nation for the share of people with accounts in distress. That means a significant portion of the population is deferring payments or seeking forbearance on their bills.
Additionally, Florida saw the 5th highest increase in bankruptcy filings. For those looking to retire in Florida, this data is a crucial reminder to ensure your fixed income is robust enough to handle rising costs. The high distress levels suggest that the cost of living may be outpacing income growth for many residents.
3. Louisiana
Total Score: 61.50
Distress Rank: #3
Louisiana lands just behind Florida with a troubling financial profile. The state shares among lowest credit scores in the nation. It also ranks very high for search interest in "loans," placing 2nd nationally.
This indicates a heavy reliance on borrowing to make ends meet. For residents in their 40s and 50s, this cycle of debt can severely hamper retirement savings. Focusing on debt reduction now is essential to ensuring durability in your financial plan later.
4. Nevada
Total Score: 58.11
Distress Rank: #4
Nevada’s economy often fluctuates with tourism, and currently, residents are feeling the pinch. The state ranks 3rd for credit score issues and 9th for the share of people with accounts in distress.
While bankruptcy filings aren't as high as the top three (ranking 15th), the credit data suggests many are living on the edge. If you are a Nevada resident, stabilizing your credit usage is a smart, proactive step. Reliance on credit for daily expenses is a trap that can derail long-term stability.
5. South Carolina
Total Score: 56.49
Distress Rank: #5
South Carolina rounds out the top five. The state ranks 2nd overall for the share of people with accounts in distress. This is a major red flag indicating that many households are unable to keep up with current obligations.
Interestingly, search interest for "loans" is also high (Rank 5). This suggests a cycle where residents are borrowing to pay off existing debts. Breaking this cycle is critical for building a secure financial future. Practical budgeting tools can offer the clarity needed to regain control.
6. Oklahoma
Total Score: 55.95
Distress Rank: #6
Oklahoma residents are showing high interest in financial relief, ranking 3rd for "loans" search interest and 6th for "debt" searches. While their bankruptcy filing rank is moderate (28th), the search data implies anxiety about liquidity.
For those in mid-life, this is the time to assess liabilities. Are high-interest loans eating into your potential savings? Refinancing or consolidating might be a value-driven decision to lower monthly pressures.
7. North Carolina
Total Score: 53.53
Distress Rank: #7
North Carolina faces specific challenges with debt management. It ranks 4th for the share of people with accounts in distress. This high ranking in deferred payments suggests that income disruptions or unexpected expenses are common.
However, the bankruptcy rate is relatively lower (Rank 20). This mixed bag suggests that while people struggle to pay monthly bills, they aren't completely collapsing into insolvency yet. It’s a precarious position that requires disciplined financial planning to correct.
8. Mississippi
Total Score: 52.11
Distress Rank: #8
Mississippi has distinct struggles, particularly with credit. It ranks 2nd in the credit score metric, meaning credit health is generally poor across the state. Furthermore, it ranks #1 for search interest in "loans," highlighting a desperate need for cash flow among residents.
If you live in Mississippi, protecting your credit score is vital. A strong score is a key asset for securing lower insurance rates and better mortgage terms, which translates to real value over time.
9. Kentucky
Total Score: 52.07
Distress Rank: #9
Kentucky residents are finding it hard to keep accounts current. The state ranks 3rd for the share of people with accounts in distress and 3rd for the average number of distressed accounts per person.
This concentration of payment issues is alarming. It implies that when financial trouble hits a Kentucky household, it hits multiple accounts at once. Building a robust safety net is the most reliable way to prevent one missed payment from cascading into a financial crisis.
10. Alabama
Total Score: 50.80
Distress Rank: #10
Alabama closes out the top ten with high search volumes for "loans" (Rank 4). The state also ranks 10th for the share of people with accounts in distress.
For families in Alabama, particularly those caring for aging parents or supporting children, these statistics reinforce the need for conservative financial management. Avoiding new debt and focusing on paying down existing balances creates the stability needed for multigenerational support.
11. Arizona
Total Score: 50.19
Distress Rank: #11
Arizona sees a notable increase in bankruptcy filings, ranking 14th in that specific metric. While accounts in distress are lower compared to the top 10 (Rank 26), the rise in bankruptcies suggests that when residents fall behind, they often cannot recover.
This "boom or bust" dynamic is a risk factor for retirement planning. Diversifying your assets and ensuring you aren't over-leveraged in real estate or high-risk investments helps maintain durability in your portfolio.
12. California
Total Score: 50.04
Distress Rank: #12
Despite its wealth, California has pockets of deep financial pain. It ranks 5th for the share of people with accounts in distress and 8th for the increase in bankruptcy filings. The high cost of living is a likely culprit here, squeezing middle-class families.
For Californians in their 50s, housing costs are often the biggest hurdle to retirement. Downsizing or relocating to a more affordable area within the state could provide the financial breathing room needed to escape these distress statistics.
13. Georgia
Total Score: 49.91
Distress Rank: #13
Georgia ranks 6th for the share of people with accounts in distress. However, it has a very low rank for bankruptcy changes (Rank 48), suggesting that while people are missing payments, they aren't filing for bankruptcy at accelerating rates compared to last year.
This indicates a struggle to maintain cash flow rather than total insolvency. Practical steps like cutting discretionary spending and renegotiating service contracts can help free up the cash needed to get accounts back in good standing.
14. Delaware
Total Score: 48.59
Distress Rank: #14
Delaware shows stress in its credit metrics, ranking 10th. It also ranks 16th for the increase in bankruptcy filings. As a corporate hub, these numbers for individual residents might seem surprising, but they reflect the broader national trend of inflation outpacing wages.
Residents should focus on credit monitoring. Catching errors and understanding your credit utilization ratio are empowering steps that give you control over your financial reputation.
15. Indiana
Total Score: 47.85
Distress Rank: #15
Indiana takes the final spot on our list. It ranks #1 for search interest in "debt," a clear sign that the population is actively worried about what they owe. While distress account rankings are moderate (Rank 28), the anxiety reflected in search habits is real.
For Hoosiers, this is a signal to act before worry turns into a crisis. Consolidating high-interest debt or meeting with a financial planner can turn that anxiety into a concrete plan of action.
Practical Steps for Financial Durability
Seeing your state on this list can be unsettling, but it doesn't dictate your personal financial future. We value self-reliance, and there are concrete steps you can take to insulate yourself from local economic distress.
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Build a "Fortress" Emergency Fund - The standard advice is three to six months of expenses. In high-distress states, aim for six to nine months. This liquidity gives you the power to weather job loss or medical emergencies without resorting to high-interest loans or deferring payments.
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Prioritize High-Interest Debt - If you are carrying credit card balances, you are vulnerable. The interest eats away at your wealth. Attack these balances aggressively. Once they are gone, that monthly cash flow becomes a tool for investment rather than a burden.
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Review Your Asset Allocation - As retirement approaches, protecting what you have earned is just as important as growing it. Ensure your investments align with your timeline. You don't need to take unnecessary risks to play catch-up. Steady, reliable growth is the key to a secure retirement.
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Monitor Your Credit Health - Don't wait until you need a loan to check your credit. Use free tools to monitor your report. Spotting identity theft or errors early saves you time and stress. A strong credit score is a shield that ensures you have options when you need them.
Economic tides change, but solid financial principles remain constant. By focusing on debt reduction, savings, and practical planning, you can ensure your financial house stands strong, regardless of the state rankings.
