Most Financially Distressed Cities: Chicago, Houston, New York Top Concerning List -

WASHINGTON — Periods of high unemployment and surging inflation in recent years have led to many financial challenges for millions of Americans, especially those living in major U.S. cities. Despite some improvement, many still find themselves grappling with financial distress, a situation where individuals are temporarily excused from making payments on debts due to hardship. A new analysis from WalletHub reveals that Americans in the nation’s biggest cities are struggling the most.

WalletHub’s study, comparing the 100 largest cities using nine key metrics, paints a stark picture of financial health across the country. Metrics include average credit scores, changes in bankruptcy filings, and the prevalence of accounts in distress.

“Getting out of the downward spiral of financial distress is no easy feat. You may get temporary relief from your lenders by not having to make payments, but all the while interest will keep building up, making the debt even harder to pay off,” says WalletHub analyst Cassandra Happe in a statement. “People who find themselves in financial distress should budget carefully, cut non-essential expenses, and pursue strategies like debt consolidation or debt management to get their situation under control.”

Couple experiencing financial stress while reviewing bills — Financial distress is a situation where individuals are temporarily excused from making payments on debts due to hardship. (© Wayhome Studio – stock.adobe.com)

Iconic Cities Constantly Talking About Debt, Loans

Chicago emerged as the city with the most significant increase in financially distressed accounts, seeing a near 30-percent rise in residents skipping payments due to hardship. This city also ranks high for the number of distressed accounts per capita and shows a keen interest in debt and loans, indicating a desperate need for financial solutions among its residents.

Houston follows closely, marked by high levels of financial distress among its population. Over eight percent of Houstonians have accounts in distress, coupled with a notable increase in non-business bankruptcy filings, suggesting that many are seeking legal avenues to escape financial turmoil.

New York City ranks third in financial distress, evidenced by a significant spike in bankruptcy filings. The city’s residents are increasingly searching for debt and loan solutions, reflecting the dire financial situations many face.

Rounding out the top five are Los Angeles and Dallas. Among the states who have the most financially distressed cities in the top 20 include Texas with five (Houston, Dallas, San Antonio, Austin, and Fort Worth) and two each for California (Los Angeles and Riverside), Florida (Miami and Jacksonville), and Louisiana (Baton Rouge and New Orleans).

Ranking at the bottom of the list are Des Moines, Iowa; Chandler, Arizona; Gilbert, Arizona; Scottsdale, Arizona; and Boise, Idaho.

Scroll down to see the full list of the 100 most financially distressed cities

Couple sitting in pile of bills, as financial struggles, money worries, debt grow — Chicago emerged as the city with the most significant increase in financially distressed accounts, seeing a near 30-percent rise in residents skipping payments due to hardship. (© Rawpixel.com – stock.adobe.com)

Pathways Out of Distress

The report offers crucial advice for those in financial distress, including exploring hardship programs, engaging in debt management, and avoiding predatory lenders. It emphasizes the importance of cautious budgeting and considering consolidation options for those with better credit scores.

WalletHub’s 6 tips for pathways 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. 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.
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.
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.

U.S. Cities with the Most People in Financial Distress

Overall Rank*	City	Total Score	Credit Score Rank	People with Accounts in Distress Rank	Average Number of Accounts in Distress Rank	Change in Bankruptcy Filings December 2023 vs. December 2022 Rank	“Debt” Search Interest Index Rank	“Loans” Search Interest Index Rank
1	Chicago, IL	72.54	65	2	1	66	1	1
2	Houston, TX	61.19	41	26	12	13	1	1
3	New York, NY	56.64	80	73	82	6	1	1
4	Los Angeles, CA	55.60	25	43	46	44	1	1
5	Dallas, TX	55.32	49	36	26	18	5	1
6	Las Vegas, NV	54.32	12	7	10	25	13	1
7	San Antonio, TX	51.15	35	24	20	23	13	1
8	Atlanta, GA	48.53	79	35	29	60	5	8
9	Riverside, CA	47.37	49	52	55	30	9	8
10	Jacksonville, FL	46.48	56	11	18	29	9	14
11	Baton Rouge, LA	45.42	42	3	2	5	55	33
12	Miami, FL	43.81	17	32	49	89	5	11
13	Austin, TX	43.37	75	34	21	35	13	11
14	New Orleans, LA	42.55	10	5	6	8	45	33
15	Fort Worth, TX	42.31	5	41	30	24	25	11
16	Nashville, TN	41.83	61	4	3	71	33	21
17	Phoenix, AZ	40.72	51	83	74	91	9	8
18	Charlotte, NC	40.70	94	33	27	7	13	21
19	Baltimore, MD	37.56	54	84	71	19	13	21
20	St. Louis, MO	37.17	11	22	17	46	33	21
21	Winston-Salem, NC	36.82	1	1	5	72	69	82
22	Tampa, FL	36.64	43	10	4	83	25	33
23	Stockton, CA	36.34	39	29	58	1	55	57
24	El Paso, TX	36.05	53	50	48	28	33	14
25	San Diego, CA	35.85	66	71	84	32	13	21
26	Memphis, TN	35.78	36	21	24	76	33	14
27	Sacramento, CA	35.36	14	48	56	12	25	33
28	Orlando, FL	34.36	58	74	39	57	25	14
29	Detroit, MI	33.81	7	46	40	81	22	21
30	Seattle, WA	33.58	85	93	92	55	5	33
31	Denver, CO	33.29	37	85	91	68	22	14
32	Cleveland, OH	33.28	73	63	57	62	25	14
33	Bakersfield, CA	33.07	6	25	33	17	45	42
34	Fresno, CA	32.65	29	47	62	9	45	33
35	Philadelphia, PA	32.29	40	78	68	99	9	21
36	Laredo, TX	32.18	22	6	7	51	98	42
37	San Jose, CA	32.00	67	69	89	49	13	33
38	Portland, OR	31.94	63	57	73	10	25	51
39	Columbus, OH	31.70	76	70	63	50	25	21
40	Washington, DC	31.13	100	99	98	3	13	51
41	North Las Vegas, NV	30.94	62	8	8	25	83	57
42	Louisville, KY	30.77	74	16	22	38	40	42
43	Indianapolis, IN	30.71	71	54	52	82	33	14
44	Plano, TX	30.54	9	58	51	4	55	82
45	Oklahoma City, OK	30.41	26	55	66	58	40	21
46	Lubbock, TX	30.21	29	42	41	11	69	42
47	Arlington, TX	30.20	32	18	15	48	55	42
48	Corpus Christi, TX	29.98	3	12	11	67	83	42
49	Reno, NV	29.55	77	19	14	16	69	67
50	Birmingham, AL	29.53	2	15	19	78	45	42
51	Minneapolis, MN	29.29	68	68	65	34	25	42
52	Colorado Springs, CO	29.11	64	27	38	20	55	51
53	Long Beach, CA	28.90	4	23	28	44	55	57
54	San Bernardino, CA	28.88	15	20	36	36	69	51
55	Henderson, NV	28.58	60	9	13	25	83	74
56	Kansas City, MO	27.66	23	60	44	70	45	31
57	Tulsa, OK	27.49	27	14	16	73	55	51
58	Anchorage, AK	26.96	13	96	99	2	83	87
59	Greensboro, NC	26.05	48	13	9	74	69	74
60	Oakland, CA	25.89	31	59	87	14	55	74
61	Milwaukee, WI	25.59	38	49	54	98	45	21
62	Raleigh, NC	25.55	91	38	31	52	40	57
63	Garland, TX	25.53	34	44	25	31	98	67
64	Irvine, CA	25.18	28	40	47	40	45	94
65	Boston, MA	24.99	96	37	34	88	22	57
66	Cincinnati, OH	24.81	84	65	80	75	33	33
67	Buffalo, NY	24.30	72	17	23	80	45	74
68	Anaheim, CA	24.12	24	62	70	40	55	67
69	Virginia Beach, VA	24.02	68	28	32	59	55	67
70	San Francisco, CA	23.74	78	91	97	97	13	42
71	Tucson, AZ	23.67	87	53	60	86	40	33
72	Aurora, CO	23.20	21	51	59	64	69	57
73	Chula Vista, CA	22.98	8	64	77	32	83	87
74	Santa Ana, CA	22.83	16	77	81	40	69	74
75	Irving, TX	22.62	47	76	42	53	83	57
76	Honolulu, HI	22.00	45	79	94	69	33	82
77	Richmond, VA	21.87	59	92	93	37	55	57
78	Wichita, KS	21.67	19	88	75	61	69	57
79	Fremont, CA	21.56	90	81	76	14	69	100
80	Omaha, NE	21.46	86	61	64	79	40	57
81	Chesapeake, VA	21.33	44	39	43	56	98	94
82	Albuquerque, NM	21.16	18	89	96	100	45	31
83	Spokane, WA	21.00	89	75	83	21	83	94
84	Durham, NC	20.99	93	31	37	54	69	87
85	Norfolk, VA	20.38	46	56	45	77	83	74
86	Fort Wayne, IN	20.36	97	45	78	43	69	74
87	Toledo, OH	20.35	92	87	90	22	83	67
88	Hialeah, FL	19.94	33	30	35	89	83	87
89	Newark, NJ	19.68	20	72	72	87	55	74
90	Mesa, AZ	19.60	83	67	50	91	55	51
91	Madison, WI	19.47	70	82	53	63	69	87
92	Glendale, AZ	18.66	55	66	61	91	69	67
93	Jersey City, NJ	18.35	57	94	88	65	55	87
94	Pittsburgh, PA	17.74	52	98	95	84	45	67
95	Lincoln, NE	17.30	95	90	85	39	83	94
96	Des Moines, IA	16.14	99	97	69	47	83	87
97	Chandler, AZ	14.57	88	86	79	91	83	82
98	Gilbert, AZ	14.24	81	95	67	91	83	94
99	Scottsdale, AZ	13.01	98	80	86	91	69	94
100	Boise, ID	12.34	82	100	100	85	83	82

Note: *No. 1 = Most Distressed
With the exception of “Total Score,” all of the columns in the table above depict the relative rank of that city, where a rank of 1 represents the worst conditions for that metric.

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Methodology

In order to determine the cities where people are in the most financial distress, WalletHub compared the 100 largest cities without data limitations across nine key metrics in six overall categories: 1) Credit Score, 2) People with Accounts in Distress, 3) Average Number of Accounts in Distress, 4) Change in Number of Bankruptcy Filings – December 2023 vs. December 2022, 5) “Debt” Search Interest Index and 6) “Loans” Search Interest Index. Researchers defined an account in distress as one which either is in forbearance or has its payments deferred.

WalletHub then determined each city’s weighted average across all metrics to calculate its overall score and used the resulting scores to rank-order our sample.

Data used to create this ranking were collected as of February 1, 2024 from the U.S. Census Bureau, Administrative Office of the U.S. Courts, Google Ads and WalletHub data.

Tags: debt, financial distress, inflation, loans, money management, poverty, unemployment, united states

Iconic Cities Constantly Talking About Debt, Loans

Scroll down to see the full list of the 100 most financially distressed cities

Pathways Out of Distress

U.S. Cities with the Most People in Financial Distress

Methodology

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