A recent study by WalletHub, titled "States with the Most People in Financial Distress," ranked Louisiana as the second most financially distressed state in the U.S. The study evaluated nine key metrics, including average credit scores, changes in bankruptcy filings, and the prevalence of distressed accounts, to assess the financial well-being of residents across all 50 states.
Louisiana residents are the second-most financially distressed people in the country. In Q3 2024, 11.6% of the state's residents had at least one credit account in financial distress, meaning the account holder was temporarily allowed to not make payments due to financial difficulty. However, the share of Bayou State residents in financial distress actually experienced a slight year-over-year decrease, dropping by 0.8%. That's one reason why the state doesn't rank first in our study.which is in the bad credit range. Many residents are also thinking about turning to loans to pay their bills, considering that Louisiana ranks second among the 50 states in Google search volume for "loans."
Louisiana's position near the top of this list indicates significant financial challenges among its residents. Factors contributing to this ranking include low average credit scores and a high percentage of accounts in distress, where account holders are temporarily allowed to defer payments due to financial difficulties. Additionally, Louisiana residents exhibit elevated rates of online searches for terms like "debt" and "loans," suggesting a widespread need for financial assistance.
The study highlights a regional trend, with many Southeastern states appearing high on the list of financial distress. This pattern underscores systemic economic issues affecting the region, such as lower median incomes, higher unemployment rates, and limited access to financial resources. These factors collectively contribute to the financial instability experienced by many Louisiana residents.
Addressing these challenges requires a multifaceted approach. Improving financial literacy through education can empower individuals to make informed decisions about budgeting, saving, and managing credit. Expanding access to financial services, such as affordable banking and credit options, can also provide residents with the tools needed to achieve financial stability. Moreover, state and local policies aimed at economic development, job creation, and income support are crucial in alleviating the underlying economic pressures contributing to financial distress.
Louisiana's ranking in the WalletHub study reflects significant financial challenges among its residents. Addressing these issues requires concerted efforts from individuals, communities, and policymakers to foster a more financially stable and prosperous environment for all.