States with the most bankruptcies – FOX 11 and FOX 41 | Vette Leader

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The COVID-19 pandemic has given many across the US an unexpected financial boost, but with the economy potentially facing a recession, households and businesses could face difficult months and years. And after years of encouraging downtrends, it could mean US bankruptcies will come back into focus.

The impact of the pandemic on consumer debt came as a pleasant economic surprise. Amid government stimulus payments and leniency measures, increased savings during the COVID shutdowns, and a tight job market with opportunities for wage increases, Americans have made great strides in paying off debt over the past two years. But more recently, as inflation weighs on budgets, lenders hike interest rates and some industries face major layoffs, households are feeling increasing financial pressures that could make it harder to keep up with debt payments.

While economic developments during the pandemic have undoubtedly helped a number of people and businesses with debt, bankruptcies have already steadily declined during the recovery from the Great Recession. In 2009, corporate bankruptcies peaked at more than 60,000, while non-corporate bankruptcies rose in 2010 to a recession-era peak of 1.5 million. By 2019, corporate bankruptcies fell by nearly two-thirds to 22,780 and non-corporate bankruptcies by about half to 752,160. Both numbers fell even further in 2020 and 2021 in the wake of the pandemic.

Similar patterns have played out for household debt arrears – defined as payments more than 30 days past due. Almost every major form of household debt rose during the Great Recession, fell during the recovery, and continued to fall as of 2020. The exception is the student loan debt decline, which remained fairly constant post-recession but fell sharply due to COVID while the federal government introduced leniency regulations that have been in place for more than two years.

But despite encouraging trends over the past decade, data from early 2021 suggests the economy may have reached a turning point. Default rates remain at historic lows but started to rise again in the first quarter of 2022 for every form of household debt except student loans. As the effects of inflation and rising interest rates continue to be felt, arrears and bankruptcies could become more common.

If bankruptcies pick up again, the largest share is likely to come from Chapter 7 liquidations, which is the most common form for both corporate and non-corporate bankruptcies. Chapter 7 involves the sale of certain properties or assets to generate cash to pay creditors. Chapter 13 bankruptcy, which involves the creation of debt repayment plans, is the second most common form for non-business debt, while Chapter 11 reorganization is most commonly used by larger corporations.

Insolvencies in the US are also unevenly distributed geographically. Many of the locations currently struggling most with debt are in more economically troubled parts of the country. Southern states account for six of the top 10 bankruptcy states, and at the top of the list are a number of Rust Belt locations like Indiana and Ohio.

The data used in this analysis comes from the Bureau of Criminal Courts, the US Census Bureau and Experian. To identify the states with the most bankruptcies in 2021, Smartest Dollar researchers calculated the number of bankruptcies per million residents.

Here are the states with the most bankruptcies per capita.

States with the most bankruptcies

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15. Missouri

  • Insolvencies per million inhabitants (2021): 1,590
  • Corporate insolvencies per million inhabitants (2021): 24
  • Non-corporate bankruptcies per million inhabitants (2021): 1,566
  • Average creditworthiness (2021): 711
  • Unemployment rate (2020): 4.5%

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14.Wisconsin

  • Insolvencies per million inhabitants (2021): 1,598
  • Corporate insolvencies per million inhabitants (2021): 33
  • Non-corporate bankruptcies per million inhabitants (2021): 1,565
  • Average creditworthiness (2021): 735
  • Unemployment rate (2020): 3.6%

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13. Illinois

  • Insolvencies per million inhabitants (2021): 1,647
  • Corporate insolvencies per million inhabitants (2021): 43
  • Non-corporate bankruptcies per million inhabitants (2021): 1,604
  • Average creditworthiness (2021): 719
  • Unemployment rate (2020): 6.0%

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12.Michigan

  • Insolvencies per million inhabitants (2021): 1,697
  • Corporate insolvencies per million inhabitants (2021): 25
  • Non-corporate bankruptcies per million inhabitants (2021): 1,671
  • Average creditworthiness (2021): 719
  • Unemployment rate (2020): 6.0%

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11. Delaware

  • Insolvencies per million inhabitants (2021): 1,723
  • Corporate insolvencies per million inhabitants (2021): 691
  • Non-corporate bankruptcies per million inhabitants (2021): 1,031
  • Average creditworthiness (2021): 714
  • Unemployment rate (2020): 5.8%

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10. Utah

  • Insolvencies per million inhabitants (2021): 1,769
  • Corporate insolvencies per million inhabitants (2021): 25
  • Non-corporate bankruptcies per million inhabitants (2021): 1,745
  • Average creditworthiness (2021): 727
  • Unemployment rate (2020): 3.6%

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9.Ohio

  • Insolvencies per million inhabitants (2021): 1,783
  • Corporate insolvencies per million inhabitants (2021): 30
  • Non-corporate bankruptcies per million inhabitants (2021): 1,753
  • Average creditworthiness (2021): 715
  • Unemployment rate (2020): 5.3%

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8. Arkansas

  • Insolvencies per million inhabitants (2021): 1,824
  • Corporate insolvencies per million inhabitants (2021): 41
  • Non-corporate bankruptcies per million inhabitants (2021): 1,783
  • Average creditworthiness (2021): 694
  • Unemployment rate (2020): 5.2%

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7. Georgia

  • Insolvencies per million inhabitants (2021): 2.015
  • Corporate insolvencies per million inhabitants (2021): 45
  • Non-corporate bankruptcies per million inhabitants (2021): 1,970
  • Average creditworthiness (2021): 693
  • Unemployment rate (2020): 5.6%

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6. Kentucky

  • Insolvencies per million inhabitants (2021): 2,038
  • Corporate insolvencies per million inhabitants (2021): 24
  • Non-corporate bankruptcies per million inhabitants (2021): 2.014
  • Average creditworthiness (2021): 702
  • Unemployment rate (2020): 5.4%

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5. Mississippi

  • Insolvencies per million inhabitants (2021): 2,068
  • Corporate insolvencies per million inhabitants (2021): 50
  • Non-corporate bankruptcies per million inhabitants (2021): 2.018
  • Average creditworthiness (2021): 681
  • Unemployment rate (2020): 7.1%

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4.Indiana

  • Insolvencies per million inhabitants (2021): 2.163
  • Corporate insolvencies per million inhabitants (2021): 29
  • Non-corporate bankruptcies per million inhabitants (2021): 2.134
  • Average creditworthiness (2021): 712
  • Unemployment rate (2020): 4.7%

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3. Tennessee

  • Insolvencies per million inhabitants (2021): 2,280
  • Corporate insolvencies per million inhabitants (2021): 33
  • Non-corporate bankruptcies per million inhabitants (2021): 2.247
  • Average creditworthiness (2021): 701
  • Unemployment rate (2020): 5.3%

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2.Nevada

  • Insolvencies per million inhabitants (2021): 2.308
  • Corporate insolvencies per million inhabitants (2021): 75
  • Non-corporate bankruptcies per million inhabitants (2021): 2.234
  • Average creditworthiness (2021): 701
  • Unemployment rate (2020): 6.6%

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1. Alabama

  • Insolvencies per million inhabitants (2021): 3,053
  • Corporate insolvencies per million inhabitants (2021): 32
  • Non-corporate bankruptcies per million inhabitants (2021): 3.021
  • Average creditworthiness (2021): 691
  • Unemployment rate (2020): 5.6%

Detailed results and methodology

The data used in this analysis comes from the US Census Bureau American Community Survey (2020)the Administrative Office of the United States Court Bankruptcy filing statisticsand experts FICO credit rating by state Record. To determine the states with the most bankruptcies, Smartest Dollar researchers calculated the number of bankruptcies per million residents. The number of bankruptcies refers to 2021, while the population data is from 2020, which is the latest data available. Note that the unemployment rate used for the analysis is for people aged 16 and over.

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