Chicago leads U.S. cities with the most residents in financial distress

Chicago ranks first for financial distress

Chicago, Illinois, ranked No. 1 in WalletHub’s February 2026 list of the U.S. cities with the most people in financial distress. The study compared 100 of the largest cities across nine measures tied to credit stress, bankruptcy trends, and online search behavior.

WalletHub defines financial distress as having a credit account in forbearance or with deferred payments.

Chicago also posted a nearly 30% increase in the share of residents with accounts in distress between the third quarter of 2024 and the third quarter of 2025. That combination of worsening credit strain and broad household pressure pushed Chicago to the top nationally.

The top 10 cities in the ranking

WalletHub’s February 2026 report listed the 10 U.S. cities with the most residents in financial distress. Chicago, Illinois, ranked first. Houston, Texas, ranked second. Las Vegas, Nevada, placed third.

Dallas, Texas, came fourth, and Los Angeles, California, ranked fifth. San Antonio, Texas, placed sixth, followed by Atlanta, Georgia, in seventh. New York City ranked eighth.

Austin, Texas, placed ninth, and Phoenix, Arizona, rounded out the top 10. Texas stood out more than any other state because four of its cities landed inside the top 10, giving it the largest share of highly ranked distressed cities.

How WalletHub defined financial distress

WalletHub defined financial distress as having at least one credit account in forbearance or with deferred payments. These are formal, lender-approved arrangements that allow borrowers to delay required payments due to financial hardship.

The study measured nine indicators grouped into six categories. Those included average credit score, year-over-year credit score change, and the share of residents with distressed accounts.

It also includes changes in that share, the average distressed accounts per person, changes in bankruptcy filings, and online search interest in debt-related terms. WalletHub said the data used to build the February 2026 ranking was collected as of January 21, 2026, before publication.

Why Chicago finished at the top

Chicago finished first because it ranked at or near the top in several of WalletHub’s main measures. In the published table, Chicago ranked No. 1 for the share of people with accounts in distress and No. 1 for the average number of distressed accounts.

It also ranked No. 1 in search interest for both “debt” and “loans,” indicating unusually great concern about borrowing and unpaid obligations.

Separate coverage of the study said Chicago also posted a nearly 30% increase in the share of residents with distressed accounts from Q3 2024 to Q3 2025. Those combined indicators made Chicago the clearest No. 1 city.

Houston ranked second nationwide

Houston, Texas, ranked No. 2 nationwide in WalletHub’s financial distress study. WalletHub said more than 8% of Houston residents had at least one account in distress, placing the city among the highest in the country on that measure.

Houston also scored high for the average number of distressed accounts per person and for online searches related to debt and loans. In WalletHub’s table, Houston placed 10th on the bankruptcy filing change measure used in the final ranking.

The broader Texas picture was also notable. Fort Worth placed 12th overall, showing that high financial strain extended beyond one large metro area in the state.

Las Vegas and Dallas filled the top four

Las Vegas, Nevada, ranked third in the nation for financial distress, while Dallas, Texas, ranked fourth. WalletHub’s table showed Las Vegas ranked third for the share of people with accounts in distress, confirming broad household credit trouble there.

Dallas scored strongly on several other measures, helping push it into the top four. It ranked third for the bankruptcy filing change measure, fifth for search interest in “debt,” and first for search interest in “loans.”

WalletHub’s methodology used credit data tied to the third quarter of 2025 and bankruptcy changes from September 2024 to September 2025 to build those standings.

Los Angeles, San Antonio, and Atlanta followed

Los Angeles, California, ranked fifth in WalletHub’s February 2026 study, San Antonio, Texas, ranked sixth, and Atlanta, Georgia, ranked seventh. The published table showed that Los Angeles ranked first for online search interest in both “debt” and “loans.”

San Antonio also ranked first for “loans” search interest and 16th for bankruptcy filing change and “debt” search interest. Atlanta ranked fifth for “debt” search interest and first for “loans” search interest.

WalletHub analyst Chip Lupo said temporary payment relief can still leave borrowers in deeper trouble because interest may keep growing while required payments are paused.

New York, Austin, and Phoenix completed it

New York City ranked eighth in WalletHub’s February 2026 list, Austin, Texas, ranked ninth, and Phoenix, Arizona, ranked 10th. WalletHub’s table showed strong stress signals in all three cities.

New York ranked first for search interest in both “debt” and “loans.” Austin ranked first for change in bankruptcy filings, a major factor in the methodology. Phoenix ranked fifth for “debt” search interest and first for “loans” search interest.

Texas again stood out, with Austin adding a fourth city to the top 10. These final three cities completed a ranking spread across seven states and several of the nation’s biggest metro areas.

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Illinois added more fiscal pressure

Chicago households were also operating in a state with heavy fiscal strain. Truth in Accounting’s 2025 Financial State of the States report gave Illinois an “F” grade and said the state’s taxpayer burden was $38,800 based on fiscal year 2023 data.

More recent Truth in Accounting reporting on Chicago put the city’s taxpayer burden at $42,600, while Chicago Public Schools said its initial FY2026 budget gap was $734 million. Those figures did not determine WalletHub’s ranking, but they added context to the broader financial pressure facing many Chicago residents.

Deferred payments do not erase debt

Forbearance and payment deferral can give households short-term breathing room, but they do not eliminate debt. WalletHub analyst Chip Lupo said interest can continue building while payments are paused, leaving borrowers with a harder path later.

That warning aligns with the national picture painted by the Federal Reserve. In its report on the economic well-being of U.S. households in 2024, the Fed said 17% of adults did not pay all their bills in full in the month before the survey.

The Federal Reserve also said that share was similar to the prior year, showing that bill payment strain remained broad before WalletHub released its city ranking.

Utility costs pushed more families behind

Utility costs became another major source of financial strain across the United States. A report based on Century Foundation analysis said past-due utility balances rose 9.7% over one year, reaching an average of $789 during the April to June periods of 2024 and 2025.

Monthly energy bills climbed 12% during that same period. The Urban Institute’s American Affordability Tracker also found that residential electricity costs were about $40 higher in December 2025 than in December 2017.

Federal energy-related reporting further showed that 43.6 million households, or 32.9% of U.S. homes, experienced some form of energy insecurity in 2024.

Lower income renters faced bigger risks

Lower-income households were much more likely to fall behind on bills. In the Federal Reserve’s report on the economic well-being of U.S. households in 2024, 34% of adults with family income below $25,000 said they did not pay all their bills in full in the previous month.

Among adults with family income of $100,000 or more, that figure was 7%. The same Federal Reserve report said renters were more likely than homeowners to report unpaid bills.

Separate Federal Reserve housing data also showed that nearly one-fourth of renters with incomes below $100,000 had been behind on rent at some point in 2024.

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Bankruptcy changes showed national strain

Bankruptcy trends were one of the measures WalletHub used to score financial distress across all 100 cities. The study tracked changes in filings between September 2024 and September 2025.

In the published table, Austin ranked first on that measure, Dallas ranked third, and Houston ranked 10th. Those results showed that rising debt pressure was not confined to any one city or part of the country.

The final top 10 cities came from Illinois, Texas, Nevada, California, Georgia, New York, and Arizona. That state mix showed financial distress cutting across several of the nation’s largest metro areas in WalletHub’s February 2026 ranking.

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What do you think is driving so many Chicago residents into financial distress? Share your thoughts below.

This slideshow was made with AI assistance and human editing.

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