Financial distress, or difficulty meeting debt obligations, is a daily part of life for many Americans, and for some, the lenders have come calling. More than one third of Americans with credit histories faced debt collections in 2013, according to a recent report from the Urban Institute.

Nearly 50% of Nevadans with a credit history had debt in collections as of 2013, the highest percentage in the nation. On average, these residents had $7,198 of debt in collections, defined as being at least 180 days past due, also the most in the nation. By comparison, 35% of Americans had debt in collection, with an average delinquent debt of $5,178.

Click here to see the states struggling with delinquent debt

While having debt in collection can be a problem, taking on debt that can be repaid is not necessarily bad. Caroline Ratcliffe, a senior fellow at the Urban Institute and an author of the report, noted that buying a home, starting a business, or investing in education are productive kinds of debt that allow people to grow their assets.

Yet, for residents who fall behind, debt can become a burden. Since the recession, Americans have focused on paying off debt. The amount of standing consumer debt fell by over a trillion dollars, from $12.7 trillion to $11.2 trillion, between 2009 and September 2013. However, the Urban Institute’s report found that the percentage of people with debt in collections remained effectively unchanged from 2004 levels.

While high average levels of delinquent debt did not appear to be concentrated in any particular region, southern states were much more likely to have a higher share of people with debt in collections. Eight of the 10 states on our list are located in the southern U.S.

In all of the states with the highest percentage of residents with delinquent debt, the median household income was below the U.S. median of $51,371. Four of these states — Alabama, Kentucky, Mississippi, and West Virginia — were among the five lowest states by median income. Additionally, these states tended to have higher shares of people who lived below the poverty line when compared to the national benchmark.

The relationship between low incomes and delinquent debt is complicated, however. Ratcliffe explained that low income and poverty can play a role in accumulating delinquent debt, but don’t tell the whole story. “In general, if high or low income families aren’t saving or accumulating assets, then those families struggle when hard times come.”

Half of these states also had unemployment rates above the national average. Nevada, which had the highest percentage of qualifying residents with debt in collections, also had the nation’s highest unemployment rate in 2013, at 9.8%. Mississippi, Georgia, and Kentucky also had among the nation’s highest unemployment rates last year.

Nearly every state with high shares of residents with delinquent debt had below average rates of educational attainment. Poor financial literacy may be the biggest byproduct of lower levels of educational attainment. As Ratcliffe pointed out, “A lot of focus now is looking at if we can improve people’s financial knowledge as a way of improving people’s financial futures.”

To identify the states with the highest share of the population with delinquent debt, 24/7 Wall St. reviewed the Urban Institute’s recently released report, “Delinquent Debt in America.” The report used 2013 data from TransUnion, which looked at Americans with credit histories who are reported as at least 30 days late on a non-mortgage payment, in addition to Americans reported as being in collections. We also reviewed median household income and educational attainment data from the U.S. Census Bureau for 2012. Data on personal disposable income growth data comes from the Bureau of Economic Analysis (BEA) and are current through 2013. Inflation figures are also from the BEA. Figures on average debt and average credit rating by state are from Credit Karma. Data on unbanked households, those without a bank account, are from the Federal Deposit Insurance Corporation’s 2011 National Survey of Unbanked and Underbanked Households.

These are the states struggling the most with debt.

10. Florida
> Share with debt in collections: 41.0%
> Avg. debt in collection: $6,396 (7th highest)
> Median household income: $45,040 (11th lowest)
> Poverty rate: 17.1% (17th highest)

In 2013, 41% of Florida residents with credit history had delinquent debt, the 10th highest percentage in the nation. Floridians also had one of the highest debt burdens in the nation, at $6,396 on average. One of the largest issues facing many residents may be the lack of wage growth. Over the five years ending in 2013, personal disposable income rose by just 4.6%, failing to keep track with inflation, as consumer prices rose 7.3% in that time. Three of the 10 metro areas with the highest share of residents with delinquent debt — Lakeland, Jacksonville and Orlando — are located in Florida.

9. West Virginia
> Share with debt in collections: 41.5%
> Avg. debt in collection: $4,697 (16th lowest)
> Median household income: $40,196 (3rd lowest)
> Poverty rate: 17.8% (13th highest)

Like many states with high numbers of financially distressed people, West Virginia’s residents are relatively poor. A typical household earned slightly more than $40,000 in 2012, versus the national median household income of $51,371. Nearly 11% of households earned less than $10,000 that year, second only to Mississippi. West Virginia adults also have relatively low levels of educational attainment. Less than 19% had at least a bachelor’s degree as of 2012, the lowest in the country.

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8. Alabama
> Share with debt in collections: 41.7%
> Avg. debt in collection: $5,604 (17th highest)
> Median household income: $41,574 (4th lowest)
> Poverty rate: 19.0% (7th highest)

Poverty has likely been a factor contributing to so many Alabamians having debt in collections. Low median income may make loan payments harder. Alabama had one of the lowest median household incomes in the country in 2012 at $41,574. Residents in debt used 37% of their gross bi-weekly income for loan payments, one of the higher rates in the country. And while the proportion of households without a bank account fell from 11.9% to 10.2% between 2009 and 2011, the proportion of underbanked households rose from 20.5% to 28.8%. Education may be another factor contributing to Alabama’s high share of residents with delinquent debt. In 2012, 84.0% of the adult population had a high school diploma, more than two percentage points below the nationwide rate.

7. Kentucky
> Share with debt in collections: 41.9%
> Avg. debt in collection: $4,420 (9th lowest)
> Median household income: $41,724 (5th lowest)
> Poverty rate: 19.4% (5th highest)

Low incomes may have contributed to the credit problems many Kentucky residents face. The median household income in the state was just $41,724 in 2012, fifth-lowest in the nation, while 19.4% of residents lived below the poverty line, the fifth-highest rate in the U.S. Kentucky is among the states that made the most progress in raising the number of residents with a bank account. From 2009 to 2011, the percentage of households without a bank account declined from 12.0% to 9.9%, dropping the state from second to 11th highest in the nation. Yet, many Kentucky residents still lack strong credit. According to figures from Credit Karma, while residents had some of the lowest totals of overall debt, on average they had among the worst credit scores in the country.

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6. Georgia
> Share with debt in collections: 42.0%
> Avg. debt in collection: $4,649 (14th lowest)
> Median household income: $47,209 (20th lowest)
> Poverty rate: 19.2% (6th highest)

Georgia residents were among the least likely Americans to have a bank account. As of 2011, 11.5% of state households were unbanked, more than in all but a few other states. Additionally, 19.2% of the state’s residents lived in poverty in 2012, among the highest rates in the nation. Poor household finances also extended to families that had access to credit as 42% of all residents had debt in collections. One problem facing many residents may be a lack of job opportunities. The state’s unemployment rate of 8.2% in 2013 was among the nation’s highest.

5. Louisiana
> Share with debt in collections: 43.8%
> Avg. debt in collection: $4,194 (the lowest)
> Median household income: $42,944 (8th lowest)
> Poverty rate: 19.9% (3rd highest)

An average Louisiana borrower had a debt of just $4,194 in collection, the lowest nationwide. Financial distress, however, is widespread. Nearly 44% of Louisiana residents with credit histories had debt in collection last year, fifth most nationwide. Poor wages are likely one contributor. Nearly one in five residents lived in poverty in 2012, more than in all but two other states. Louisiana residents have lower-than-average credit card debts and smaller mortgages, but take out larger loans for automobiles compared to most Americans. The average Louisianian had nearly $9,000 in auto debt last year, more than in all but a handful of states.

4. Mississippi
> Share with debt in collections: 44.7% (tied-3rd highest)
> Avg. debt in collection: $4,413 (8th lowest)
> Median household income: $37,095 (the lowest)
> Poverty rate: 24.2% (the highest)

Financial struggles are a problem for a large number of people in Mississippi, which has routinely had the highest poverty rate in the country. In 2012, 24.2% of state residents lived below the poverty line, by far the highest rate in the U.S. Bad credit can have a variety of consequences, including worsened job prospects, and increased difficulty in securing future loans. Joblessness is a long-running problem for much of the state. In 2013, 8.6% of the workforce was unemployed, among the highest rates in the country. Limited access to financial services was also a problem in Mississippi. More than 15% of households were unbanked as of 2011, far more than in any other state.

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3. Texas
> Share with debt in collections: 44.7% (tied-3rd highest)
> Avg. debt in collection: $5,049 (24th lowest)
> Median household income: $50,740 (24th highest)
> Poverty rate: 17.9% (11th highest)

Financial problems plagued many Texas residents. In 2011, 12.8% of households did not even have a bank account, more than in any state except for Mississippi. Many residents who did need to borrow money were forced to take out high interest payday loans — small dollar, short-term loans for individuals who need cash. A 2013 study from the Pew Charitable Trusts indicated that, in Texas, payday loan customers had to spend an average of 38% of their biweekly gross income on repayments, the second highest percentage in the nation. Residents of the state may struggle with debt due to a lack of financial education. Just 81.4% of the population ages 25 or older had a high school diploma as of 2012, the lowest percentage in America.

2. South Carolina
> Share with debt in collections: 46.2%
> Avg. debt in collection: $5,606 (16th highest)
> Median household income: $43,107 (9th lowest)
> Poverty rate: 18.3% (9th highest)

The proportion of people accessing banking services in South Carolina has fallen in recent years, as the percentage of households without a bank account fell from 10.3% to 9.3% between 2009 and 2011, even as the national rate increased from 7.6% to 8.2%. More South Carolina residents accessed banking services in 2011 than they did in 2009. Residents had an average credit score of just 615, however, the second lowest in the country. Low credit scores may be the result of low median incomes and a high poverty rate, which can make it more difficult to make loan payments. Slightly more than 18% of the population lived below the poverty line at some point in 2012.

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1. Nevada
> Share with debt in collections: 46.9%
> Avg. debt in collection: $7,198 (the highest)
> Median household income: $49,760 (24th lowest)
> Poverty rate: 16.4% (19th highest)

No state had a greater share of residents with debt in collection than Nevada, where almost 47% of residents with credit had non-mortgage debt more than 180 days past due. Additionally, Nevadans with a credit history had more debt in collections than residents in any other state, with an average debt of $7,198. One likely contributor to residents’ debt problems was the poor shape of the local economy. Nevada has suffered from high unemployment for years, and, in 2013, had the highest unemployment rate in the nation at 9.8%. Additionally, per capita personal disposable income dropped by 2.4% in the five years through 2013, not adjusted for inflation. Nevada was the only state in the U.S. to experience such a decline in personal disposable income.

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