Home > Managing Debt > 10 States With the Highest Bankruptcy Rates

Comments 0 Comments

Every year, hundreds of thousands of Americans file for bankruptcy. Even though it damages the consumer’s credit for years and many people would do almost anything to avoid bankruptcy, it’s sometimes the best and fastest way for a debtor to recover from financial hardship.

It’s not a decision to make lightly, but it’s also an option you don’t want to ignore for too long, because if your situation could be helped by bankruptcy, you only prolong your financial struggle by putting it off. There are many signs bankruptcy might be right for you, like seeing your debt balances grow even though you’re making payments, raiding your retirement savings to make debt payments, struggling with an underwater mortgage, or putting others — such as your family— at risk if you don’t take care of your debt.

A bankruptcy can remain on your credit reports for up to 10 years from the date it was filed, though you might be able to have it removed earlier. Once you file for bankruptcy, you want to start practicing good credit habits, like making any remaining debt payments on time and keeping credit balances very low. You could use a secured credit card to rebuild your credit, (here are some of the best secured credit cards out there) and you’ll also want to make sure you stay on top of other financial obligations, so unpaid bills don’t get sent to a debt collector and end up damaging your already-shaky credit standing. You can also track your credit rebuilding progress by getting a free credit report summary every 30 days on Credit.com.

In 2014, there were 898,970 non-business bankruptcy filings in the 50 states and the District of Columbia, coming out to a bankruptcy rate of 2.8 people in bankruptcy per 1,000 people. In a few parts of the country, bankruptcy is much more common, according to bankruptcy data from the Administrative Office of the U.S. Courts and 2014 population estimates from the U.S. Census Bureau. Here are the states with the highest bankruptcy rates last year.

10. Mississippi
2014 bankruptcy rate: 3.62 bankruptcies per 1,000 people

9. Arkansas
Bankruptcy rate: 3.71 per 1,000

8. Kentucky
Bankruptcy rate: 3.78 per 1,000

7. Nevada
Bankruptcy rate: 3.79 per 1,000

6. Indiana
Bankruptcy rate: 4.36 per 1,000

5. Utah
Bankruptcy rate: 4.59 per 1,000

4. Illinois
Bankruptcy rate: 4.68 per 1,000

3. Georgia
Bankruptcy rate: 5.1314 per 1,000

2. Alabama
Bankruptcy rate: 5.1316 per 1,000

1. Tennessee
Bankruptcy rate: 5.89 per 1,000

Bankruptcy is a worthwhile consideration for anyone who struggling with debts they can’t expect to repay over the course of a few years, but it’s not a get-out-of-debt-free strategy. Filing for bankruptcy takes a huge toll on your credit, and you generally can’t discharge student loans in bankruptcy. Consult a bankruptcy attorney to find out if it’s the best option for you.

More on Managing Debt:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team