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States and Counties With the Highest Bankruptcy Rates

Credit Cards, Personal Finance
States and Counties With the Highest Bankruptcy Rates
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Debt relief through bankruptcy means no more collections calls, wage garnishments or lawsuits. And, depending on the type of bankruptcy, no more overwhelming debt. Most personal bankruptcy filings are for Chapter 7, which erases much unsecured debt — such as credit-card debt and medical bills.

But filing for bankruptcy has a lasting impact on credit history. A bankruptcy claim lives on a credit report for seven to 10 years, and it can become harder to access unsecured credit or loans (not backed by collateral) until you begin building a positive credit history. In some cases, assets that aren’t protected by state law may have to be sold to pay off creditors.

Bankruptcy filing rates across the nation

The Great Recession prompted many people to make the tough call to file for bankruptcy. Before the downturn, bankruptcy filings by consumers totaled 822,590 in 2007, according to the American Bankruptcy Institute. The number of filings rose to over 1 million each year from 2008 to 2011. Since then, the tide of bankruptcies has ebbed: In 2015, the U.S. saw the lowest number of personal filings since the pre-recession days, with less than 820,000.

Even with bankruptcy filings declining across the nation, Americans living in some parts of the country have a much higher bankruptcy rate than in other places. For this report, NerdWallet examined the most recent federal court data to get a picture of bankruptcy filings at the state and county level.

Personal bankruptcy trends

We analyzed U.S. Courts data to determine the number of personal bankruptcy filings per 100,000 people in each state and 587 counties.

The median bankruptcy rate among the counties NerdWallet examined was 224 filings per 100,000 people from April 1, 2015, to March 31, 2016. In the 10 counties with the highest bankruptcy filings, the rate was nearly four times greater, at 856 per 100,000 people. See the full methodology of our analysis below.

Here’s what else we found:

The South stands out. Six of the 10 states and eight of the 10 counties with the highest rate of personal bankruptcy filings are in the South. The other areas with the highest personal bankruptcy rates are in the Midwest — three states (Illinois, Indiana and Ohio) and two counties — and the West (Utah).

States where residents have lower median incomes have more bankruptcies. Eight of the 10 states and eight of the 10 counties with the highest rates of bankruptcy filings have annual household incomes lower than the 2014 U.S. median of $53,657. St. Louis, Missouri, which the U.S. Census Bureau classifies as a county, has among the lowest median annual household incomes of the counties analyzed, at $35,959.

Debt protection laws vary by state. Many of the states with the highest bankruptcy rates in this analysis also offer the fewest legal protections for indebted individuals when collectors try to seize their assets. Alabama and Kentucky, for example, allow collectors to seize nearly everything a debtor owns, according to the National Consumer Law Center.

Counties with the highest rates of bankruptcy

Scroll through this list to see 100 counties with the highest rates of personal bankruptcy filings:

County and statePersonal bankruptcy filings per 100,000 people 2015-2016
1. Shelby County, Tennessee1,285.83
2. Clayton County, Georgia1,096.05
3. Houston County, Alabama940.06
4. St. Louis, Missouri891.04
5. Henry County, Georgia861.44
6. Newton County, Georgia850.22
7. Milwaukee County, Wisconsin780.15
8. Douglas County, Georgia754.61
9. Bradley County, Tennessee744.52
10. Montgomery County, Alabama737.60
11. Hamilton County, Tennessee698.43
12. DeKalb County, Georgia673.66
13. Jefferson County, Alabama 672.40
14. Tuscaloosa County, Alabama655.86
15. Pulaski County, Arkansas653.12
16. Cook County, Illinois638.35
17. Mobile County, Alabama629.40
18. Lake County, Indiana617.07
19. Ouachita Parish, Louisiana615.64
20. Cumberland County, New Jersey612.97
21. Weber County, Utah604.30
22. Richmond County, Georgia600.27
23. Paulding County, Georgia562.64
24. Genesee County, Michigan555.35
25. Porter County, Indiana546.98
26. Bartow County, Georgia545.79
27. Chatham County, Georgia535.77
28. Hinds County, Mississippi533.36
29. Saline County, Arkansas531.25
30. Bibb County, Georgia529.51
31. Wayne County, Michigan523.27
32. Lee County, Alabama516.95
33. Clark County, Indiana511.53
34. Madison County, Indiana511.14
35. DeSoto County, Mississippi506.42
36. Coweta County, Georgia503.73
37. Marion County, Indiana502.86
38. Fulton County, Georgia501.81
39. Caddo Parish, Louisiana497.79
40. Rapides Parish, Louisiana489.41
41. Gwinnett County, Georgia487.95
42. Atlantic County, New Jersey485.61
43. Salt Lake County, Utah481.73
44. Baldwin County, Alabama473.84
45. Whitfield County, Georgia465.42
46. Hampton, Virginia464.56
47. Saginaw County, Michigan463.27
48. Montgomery County, Tennessee451.61
49. Prince George's County, Maryland450.52
50. Allen County, Indiana446.83
51. Henrico County, Virginia446.20
52. Muscogee County, Georgia445.40
53. Cuyahoga County, Ohio443.86
54. Johnson County, Indiana443.71
55. Rutherford County, Tennessee442.17
56. Shawnee County, Kansas441.77
57. Sumner County, Tennessee441.08
58. Calhoun County, Alabama440.33
59. Camden County, New Jersey440.28
60. Winnebago County, Illinois436.60
61. Rankin County, Mississippi432.35
62. Houston County, Georgia431.25
63. St. Clair County, Illinois427.32
64. Calcasieu Parish, Louisiana426.79
65. Richmond, Virginia426.41
66. Baltimore, Maryland423.77
67. Kenton County, Kentucky423.06
68. Carroll County, Georgia422.80
69. Charles County, Maryland421.97
70. Davidson County, Tennessee420.65
71. LaPorte County, Indiana419.61
72. Chesterfield County, Virginia419.01
73. Macomb County, Michigan418.32
74. Will County, Illinois417.97
75. Morgan County, Alabama415.05
76. Cobb County, Georgia414.43
77. Racine County, Wisconsin412.74
78. Bossier Parish, Louisiana411.75
79. Osceola County, Florida410.78
80. Macon County, Illinois409.71
81. Summit County, Ohio407.23
82. Mahoning County, Ohio407.11
83. Baltimore County, Maryland405.15
84. Miami-Dade County, Florida403.67
85. Newport News, Virginia403.06
86. Kootenai County, Idaho402.01
87. Jefferson County, Kentucky400.41
88. Boone County, Kentucky399.90
89. Hardin County, Kentucky396.04
90. Madison County, Alabama394.78
91. Faulkner County, Arkansas394.72
92. Lowndes County, Georgia394.61
93. Yakima County, Washington392.45
94. Gloucester County, New Jersey392.12
95. Montgomery County, Ohio391.92
96. Kenosha County, Wisconsin391.59
97. Chesapeake, Virginia384.80
98. Davis County, Utah384.08
99. Vanderburgh County, Indiana383.69
100. Etowah County, Alabama 381.27

 

Counties with the lowest rates of bankruptcy
Scroll through this list to see 100 counties with the lowest rates of personal bankruptcy filings:

County and statePersonal bankruptcy filings per 100,000 people 2015-2016
1. Ector County, Texas34.5
2. Brazos County, Texas39.7
3. Midland County, Texas45.09
4. Centre County, Pennsylvania49.92
5. Tompkins County, New York 61.06
6. New York County, New York63.89
7. Travis County, Texas67.07
8. Hidalgo County, Texas71.18
9. Chittenden County, Vermont71.21
10. Anchorage, Alaska 71.43
11. Arlington County, Virginia72.67
12. Lubbock County, Texas73.24
13. Sumter County, Florida76.18
14. San Francisco County, California76.83
15. Hawaii County, Hawaii77.09
16. Johnson County, Iowa77.48
17. Navajo County, Arizona79.08
18. Orange County, North Carolina79.4
19. Webb County, Texas80.55
20. Anderson County, South Carolina82.21
21. Monongalia County, West Virginia82.73
22. Humboldt County, California83.04
23. Middlesex County, Massachusetts83.13
24. Kings County, New York83.98
25. Lycoming County, Pennsylvania83.99
26. Marin County, California84.11
27. Suffolk County, Massachusetts84.9
28. Hays County, Texas85.68
29. Nueces County, Texas88.47
30. Pickens County, South Carolina89.48
31. Potter County, Texas90.12
32. Montgomery County, Texas90.14
33. Alachua County, Florida90.17
34. Napa County, California91.92
35. Guadalupe County, Texas94.48
36. Washington, D.C.94.51
37. Hampshire County, Massachusetts97.3
38. McLennan County, Texas98.87
39. Brazoria County, Texas99.55
40. Greenville County, South Carolina99.98
41. Honolulu County, Hawaii100.54
42. Norfolk County, Massachusetts100.61
43. Cameron County, Texas101.66
44. Williamson County, Texas102.36
45. Charleston County, South Carolina103.1
46. San Mateo County, California103.54
47. Coconino County, Arizona103.82
48. Rowan County, North Carolina104.16
49. San Luis Obispo County, California104.67
50. Harris County, Texas105.35
51. Ontario County, New York105.53
52. Tom Green County, Texas108.35
53. Lancaster County, Pennsylvania108.95
54. Galveston County, Texas109.17
55. Cumberland County, Maine110.08
56. Spartanburg County, South Carolina113.26
57. Chester County, Pennsylvania113.34
58. Berkshire County, Massachusetts113.79
59. Cass County, North Dakota115.79
60. Gregg County, Texas116.51
61. Alamance County, North Carolina117.75
62. Catawba County, North Carolina117.83
63. Merced County, California118.12
64. Queens County, New York119.62
65. Randall County, Texas120.13
66. Tolland County, Connecticut120.2
67. Fort Bend County, Texas121.34
68. Olmsted County, Minnesota122.09
69. Strafford County, New Hampshire122.2
70. Comal County, Texas122.62
71. Buncombe County, North Carolina124.29
72. Kennebec County, Maine125.1
73. Santa Barbara County, California125.82
74. Monroe County, New York125.92
75. Henderson County, North Carolina126.1
76. Santa Clara County, California126.79
77. Westchester County, New York127.3
78. York County, Maine128.18
79. Alameda County, California128.58
80. Johnson County, Texas128.69
81. Richmond County, New York128.94
82. Robeson County, North Carolina128.97
83. Taylor County, Texas131.03
84. Jefferson County, Texas131.11
85. Gaston County, North Carolina131.97
86. Bexar County, Texas132.47
87. Smith County, Texas132.72
88. Black Hawk County, Iowa133.39
89. Blair County, Pennsylvania134.17
90. Bronx County, New York134.98
91. Mecklenburg County, North Carolina135.47
92. Okaloosa County, Florida135.99
93. Leon County, Florida136
94. Union County, North Carolina136.59
95. Sonoma County, California136.85
96. Bell County, Texas137.44
97. New London County, Connecticut137.56
98. Parker County, Texas137.75
99. Lebanon County, Pennsylvania138.33
100. Hillsborough County, New Hampshire138.79

When is bankruptcy the right step?

Filing for bankruptcy may be a solution for people drowning in debt with no means to pay it off. This option should be considered if unsecured debt is more than half of your total annual income, you can’t foresee being able to pay it off within five years — even by taking extreme measures — or if the monthly payments on the debt are consuming a disproportionate share of income. Another indicator: The debt interferes with sleep, relationships or other aspects of your life.

Before filing for bankruptcy, examine other options, such as managing debt through a credit counseling agency. Seek advice from a nonprofit credit counselor, too; an initial consultation is usually free. If bankruptcy still seems like the answer, enlist a qualified bankruptcy attorney for guidance through the process.

How to rebuild credit after bankruptcy

There were 195,679 consumer bankruptcy filings in the first three months of 2016, according to the American Bankruptcy Institute. Here’s how to get back on the road to good credit after a bankruptcy filing.

Create a budget. Show future lenders that you can manage money by saving enough income to pay current expenses. Contribute to an emergency fund, too, to avoid having to borrow again when faced with an unexpected expense. Aim for enough in the fund to cover three to six months of living expenses, but even a few hundred dollars is a start.

Pay as you go. Try living on cash by buying only in cash. While this may mean a downsized lifestyle, this discipline could halt another cycle of debt and bankruptcy.

Gradually access credit. A Chapter 13 bankruptcy, which requires at least partial repayment of debts, remains on a credit report for seven years from the filing date. Chapter 7 bankruptcy, which forgives most unsecured debt, stays on a credit report for 10 years from the filing date. That means access to credit will be limited, and you’ll pay high interest on credit. Here are some ways to start rebuilding credit:

  • Apply for a secured credit card. For this kind of card, you put a sum of money on deposit, and that amount is typically your credit limit. So a card with a $1,000 deposit means a $1,000 credit limit. Most secured credit cards charge annual fees and high interest, but the goal isn’t to keep this card forever. If the issuer reports your responsible activity to the credit bureaus — and make sure it reports to the bureaus before applying for a card — your credit score will probably improve over time. This may help you upgrade to a better, unsecured credit card later. While these products can be good credit cards for bad credit, keep in mind that you can still be rejected for secured cards. Some issuers won’t approve an application if you have a bankruptcy, and all issuers will expect proof that you have income to pay the bills. Before applying for a secured card, call the issuer to ask about requirements and whether a bankruptcy is an automatic disqualification, which will have a negative impact on an already-tattered credit score.
  • Enlist a co-signer on a credit card. Some credit card issuers allow a co-signer on an application, which boosts the chances of approval and may help your credit score. A co-signer is a second applicant who’s on the hook to pay the balance if you default. Consider asking a family member or friend with a solid credit history to co-sign.
  • Become an authorized user. Authorized users can use someone else’s credit and usually receive their own credit card, but they don’t have any legal responsibilities. It’s the primary cardholder who owns the account and is accountable for payments. On this route, make sure the card issuer reports authorized users to the credit bureaus. Your credit score may rise a bit in this scenario, but not as much as if you had your own account.

Use credit wisely. After getting access to new lines of credit, use it to raise your score and practice responsible habits. Pay bills on time and in full, and keep your credit utilization ratio — the amount owed as a percentage of available credit — below 30%. Otherwise, you could fall back into the debt cycle that led to bankruptcy.

Methodology

To find the bankruptcy rate for each state and Washington, D.C., we calculated bankruptcy filings per 100,000 people. We did the same for the 587 U.S. counties with populations of 100,000 or more. Population figures, as well as median annual household income data, are from 2014, the latest available data from the U.S. Census Bureau.

We measured the number of bankruptcy filings in each state and county with caseload statistics from the U.S. Courts from April 1, 2015 to March 31, 2016. We tracked personal filings of Chapter 7, 11, 12 and 13 bankruptcy.

Debt seizures by state are from a 2013 National Consumer Law Center study that rated each state on its protections of family finances.

This post has been updated to clarify the impact of bankruptcy on a filer’s ability to later access credit.

Laura McMullen is a staff writer at NerdWallet, a personal finance website. Email: lmcmullen@nerdwallet.com. Twitter:@lauraemcmullen. Courtney Miller is a data analyst at NerdWallet. Email: courtney.miller@nerdwallet.com.