Florida among top 20 most financially distressed states. Here's what that means

Between inflation, fluctuating unemployment, public health crises and natural disasters, many people across the country have found it hard to make ends meet.

Personal finance website WalletHub released its list of the top states where residents have been facing financial distress the most and Florida ranked towards the top.

“Measuring the share of residents in financial distress is a good way to take the pulse of a state and see whether people are generally thriving or having trouble making ends meet. When you combine data about people delaying payments with other metrics like bankruptcy filings and credit score changes, it paints a good picture of the overall economic trends of a state," WalletHub Analyst Cassandra Happe said.

What does 'financially distressed' mean? See WalletHub's methodology

According to Investopedia, financial distress is a condition in which a "company or individual cannot generate sufficient revenues or income, making it unable to meet or pay its financial obligations. This is generally due to high fixed costs, a large degree of illiquid assets, or revenues sensitive to economic downturns."

WalletHub compared all 50 states across nine key metrics in six categories, including:

• Average credit score
• People with Accounts in Distress
• Average Number of Accounts in Distress
• Change in Number of Bankruptcy Filings - March 2024 vs. March 2023
• “Debt” Search Interest Index
• “Loans” Search Interest Index

Where does Florida rank for most financially distressed states?

The Sunshine State placed in the top 20, taking the 13th spot on the list. Here’s how the state ranked in individual categories, which were combined to find its overall ranking:

• Total Score Rank: 44.64
• Credit Score Rank: 3
• People with Accounts in Financial Distress: 13
• Average Number of Accounts in Financial Distress: 15
• Change in Bankruptcy Filings March 2024 vs. March 2023 Rank: 9
• “Debt” Search Interest Index Rank: 29
• “Loans” Search Interest Index Rank: 27

Who tops the list for the most financially distressed states in the country?

Michigan residents are the most financially distressed people in the country.

"In Q1 2024, Michigan had the most accounts per person in financial distress, meaning accounts where the account holder was temporarily allowed to not make payments due to financial difficulty. Michiganians also had the second-highest increase in the share of people with distressed accounts between Q1 2023 and Q1 2024, at over 70%," the study said.

In addition, the study found that the Great Lake State had the fourth-highest overall share of people with accounts in distress, at 7.9%. Here's Michigan's individual category rankings:

• Total Score Rank: 59.91
• Credit Score Rank: 44
• People with Accounts in Financial Distress: 2
• Average Number of Accounts in Financial Distress: 1
• Change in Bankruptcy Filings March 2024 vs. March 2023 Rank: 39
• “Debt” Search Interest Index Rank: 10
• “Loans” Search Interest Index Rank: 26

See top 20 financially distressed states:

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

What is the most financially distressed city in America?

According to WalletHub experts earlier this year, Chicago had the biggest change in the share of people who had accounts in distress between Q4 2022 and Q4 2023, with a nearly 30% increase. This means that nearly 30% more residents were allowed to skip payments due to financial difficulty in 2023.

In addition, Chicago residents had the third-most accounts in distress per person. Experts found that residents also have some of the highest Google search interest in the country for terms like “debt” and “loans,” which shows that people need to borrow even more.

See the top 20 financially distressed cities in the country, including two Florida cities:

1. Chicago
2. Houston
3. New York City
4. Los Angeles
5. Dallas
6. Las Vegas
7. San Antonio
8. Atlanta
9. Riverside, California
10. Jacksonville, Florida
11. Baton Rouge, Lousiana
12. Miami
13. Austin, Texas
14. New Orleans
15. Fort Worth, Texas
16. Nashville
17. Phoenix
18. Charlotte, North Carolina
19. St. Louis

Most financially distressed cities:Debt puts this Florida city in 'financially distressed' Top 10.

Which state is the least financially distressed?

New Hampshire was crowded the least financially distressed state in the entire country.

Here's New Hampshire's individual category rankings:

• Total Score Rank: 21.71
• Credit Score Rank: 38
• People with Accounts in Financial Distress: 49
• Average Number of Accounts in Financial Distress: 50
• Change in Bankruptcy Filings March 2024 vs. March 2023 Rank: 41
• “Debt” Search Interest Index Rank: 32
• “Loans” Search Interest Index Rank: 44

WalletHub experts offer tips for getting out of financial distress

• Consider Hardship Programs: "If your financial difficulties are temporary, you can ask your creditors about their 'hardship programs.' These programs allow you to temporarily defer or reduce your monthly payments until you get back on your feet."
• Try Debt Management: "Debt management involves negotiating permanently better terms with your credit card issuer, such as lower monthly payments or a lower interest rate. Creditors want to get paid on time, so if you show a willingness to pay what you owe but express that you need a bit of relief to do so, you may be successful. You should avoid paying a debt management company, though, as you can set up a plan directly with your lender."
• Avoid Easy Ways Out: "You might be getting offers for various types of debt solutions, and it can be difficult to determine what’s legitimate and what’s not. A good rule of thumb is that if it seems too good to be true, it probably is. For example, debt settlement companies may promise to get you off the hook for pennies on the dollar, but they’ll also require you to default first and hurt your credit score further. They tend to charge expensive fees, too. You could propose a debt settlement offer to your lender directly, but most people in financial distress don’t have the money saved for a lump-sum payment."
• Consolidate Your Debt: "A debt consolidation loan can put all your debts in one place with a lower interest rate. Another similar option is a balance transfer credit card. In both cases, though, you'll typically need good or excellent credit to qualify for any decent options. You can qualify for a debt consolidation loan with lower credit scores – even bad credit, in some cases – but you won’t necessarily get an interest rate lower than the ones on your existing debts."
• Avoid Predatory Lenders: "It may be tempting to get quick, almost-guaranteed cash from a payday lender or auto title lender. But if you do, you’ll be slapped with exorbitant interest rates and fees that will make paying back the money a nightmare."
• Budget Carefully: "One way to have more money to pay your debts each month is to be stricter about your spending. Cut out any luxury purchases that you can, try to find better deals on your essential purchases, and put as much extra as you can toward paying your debts. In most cases, anything extra that you pay will help pay down the principal balance, rather than just interest, which helps you get out of debt more quickly."