Americans in Debt

Americans are drowning in debt. Before the recession, we were merely treading water in dangerous seas. But once the economy turned ugly, jobs went away and nest eggs cracked, those with the most debt, sunk. Many people were forced into insolvency or foreclosure, unable to pay their obligations or provide for their families.

Although economists (mostly) believe the U.S. economy is in recovery, many Americans are still struggling to climb out of debt. Too many of us have grown weary of the fight.

It’s not that being in debt in America is a new idea — or even a bad one. Debt allows us to buy homes and cars, send our kids to college, and have things in the present that we can pay for in the future. Indeed, capitalism essentially was built on the extension of credit and the ensuing debt it creates.

There are a number of legal protections for paying back money owed to creditors and also protection from illicit debt-collection practices. There are a small number of federal regulations, and many states use them exclusively. Other states built in varying laws for their residents. Among them are California, Texas, Florida and New York. Among the laws are protections for credit-card holders.

Facts and Figures about American Debt

The modern-day credit card — which entered the scene in the late 1950s — has meant financial disaster for many individuals and families.

Consider these statistics about personal debt in America :
  • More than 160 million Americans have credit cards.
  • The average credit card holder has at least three cards.
  • On average, each household with a credit card carries more than $15,000 in credit card debt.
  • Total U.S. consumer debt is at $11.4 trillion. That includes mortgages, auto loans, credit cards and student loans.

The first step to getting help with credit cards is learning about this type of debt. Your goal should be to pay off your credit card debt as soon as possible. Debt consolidation or debt settlement could help you achieve that goal of getting out of debt.


While Americans as a whole carry significant amounts of debt, each state has its own unique problems. The makeup of state-specific debt reflects not just the national economy but also factors like unemployment rates, the worth of homes and the cost of college. Here’s a quick look at some of the states whose residents have the highest debt levels in the country:


The average Californian now owes $304,000 in mortgage debt, surpassing every other state in the country. This is a 2.5-percent decrease from 2011 but does not signify an improving market. Instead, experts say the decrease was largely caused by a high amount of foreclosures wiping out old mortgages.

Californians also have an average of almost $10,000 in student loan debt, nearly $14,000 in auto loan debt and more than $7,000 on their credit cards. Some years, these unsustainable levels of debt lead to hundreds of thousands of bankruptcies. In 2010, 251,400 people and couples filed for personal bankruptcy in California.

Californians are aided, however, by consumer-friendly laws protecting financial rights. The two main laws prevent unfair debt collection practices and allow consumers to refuse to pay their credit card bills in certain situations.


Floridians are still suffering the effects of the housing market crash of 2007. The crash caused homes in the state to lose half their market values, causing mortgages and home loans to have greater balances than the actual worth of the homes. So, while the average mortgage in Florida is barely half that of California’s average, the state’s mortgage situation is considered the worst in the country.

Other typical debts in the state resemble national averages or fall below them. Floridians typically graduate college with $21,000 in student loans, carry $6,700 on their credit cards and owe $15,500 on their cars.

High debt levels, combined with a lack of state-granted protections, have forced a greater percentage of Floridians into bankruptcy.  The state’s personal bankruptcy rate in 2010 was 12 percent higher than the bankruptcy rate nationwide.


Massachusetts residents have costly mortgages averaging nearly $225,000, as well as student loans of around $25,500 for new graduates. Despite this, Bay Staters aren’t struggling to pay down their loans. With the sixth highest average income in the country and the fifth highest home values, few Bay Staters are forced into foreclosure or choose to file for bankruptcy. Credit scores in the state reflect these good financial practices. Residents have an average score of 680, the second highest in the country.

While they may be better than most states at handling debt, Bay Staters have other areas where they remain average. Massachusetts has typical levels of consumer fraud and identity theft, and its consumer protection laws are basic and follow common sense rather than improving upon national laws.


Michigan residents suffer financially in large part because of the state’s high unemployment rate. This leaves them with little choice but to take on all types of debts in order to pay their expenses. In turn, this leads to bankruptcy rates higher than the national average. Such well-established financial problems have taken their toll on Michiganders’ credit scores, which are now eight points worse than the national average of 651.

One thing Michiganders have going in their favor is the abundance of state laws on consumer debt issues. Numerous laws help consumers secure their financial well-being and personal information.

New Jersey

Many New Jersey residents are in financial hot water, especially when it comes to their mortgages. The average mortgage in the state has an outstanding balance of $236,000, one of the highest in the country, and almost one in 10 mortgages is at least 90 days delinquent. In fact, some mortgages haven’t been paid for years but avoid foreclosure because of bureaucratic delays. This prevents the housing market and the economy as a whole from recuperating.

Still, New Jerseyans have an average credit score of 681, the highest in the country. They also have some of the best and most comprehensive consumer protection laws in the country, regulating nearly every type of transaction.

New York

Student loan debt in New York accounts for a tenth of all debt held by residents, with students graduating with a typical education debt of more than $26,000. Many in the state have trouble paying not only student loan bills but also other monthly bills, including their mortgages. In early 2012, nearly 10 percent of mortgages were delinquent and at risk of foreclosure.

One thing New Yorkers are doing right, however, is keeping their credit card balances low. Residents carry a typical balance of $6,600, a full $700 less than the national average.

New York legislation also helps. State laws prevent debt collectors from targeting various types of income such as veteran benefits and child support. Laws also help protect against unfair and misleading tactics in certain home sales.


Ohioans struggle most with student loans and credit card debt. Ohioans who graduate college with debt have an average of $27,713 in student loans. And among residents of some Ohio cities, credit card debt amounts to 17 percent of their annual incomes.

Still, Ohioans’ finances are healthier than most Americans’. They have lower amounts of mortgage debt and lower rates of mortgage delinquency. This is in part the result of careful government consideration and numerous state consumer protection laws.

Overall, Ohio’s positive and negative aspects balance out in terms of financial well-being, and Ohioans maintain credit scores on par with the country’s average.


Pennsylvanians overall are financially healthy, opting for “good debt” in the form of student loans rather than debts like credit card debt. But despite lower amounts of debt, Pennsylvanians still have worse-than-average credit scores. This could signify something as simple as shorter credit histories rather than any trends of irresponsibility. As with higher student loan debt, this could be the result of a younger population.

It seems the only aspect of financial life working against Pennsylvanians is their state Legislature. Pennsylvania laws don’t tend to add anything to consumer rights or protections and instead opt simply to restate federal laws. This leads to problems like high rates of identity theft.


Texans are in a better financial situation overall than most Americans, with about $13,500 less debt per person than the average American. In recent years they’ve worked to reduce credit card debt and outstanding student loans, causing an overall decline in bankruptcy numbers. Aiding this progress are state credit card laws which limit interest rates and fees.

Despite lower debt amounts, Texas residents struggle to make payments on time. This puts a dent in their credit histories and lowers their credit scores. On average, Texans maintain credit scores around 645, a notch lower than the national average of 680.


Virginia residents have high levels of all types of debt. They rank sixth in the country for credit card debt, mortgage debt and student loan debt. But unlike residents of other indebted states, Virginians are able to keep their debts in check. That’s largely because they have the eighth-highest median income in the country. Responsible payment patterns have helped the state maintain its spot on the list of top 10 credit scores.

Virginia fails when it comes to other areas of financial health. It has high levels of consumer fraud and identity theft, and exceptionally few consumer protection laws.

Debt Can Lead to Foreclosure

While the statisticians can supply us with a plethora of facts and on how much debt Americans are in, the human costs of America’s debt problem — though real and serious — are harder to calculate. They reside in the millions of personal stories and countless legal forms and financial files all across the country, and they will be subject to review by the social scientists and economic essayists of the future.

These statistics also shed light on the human cost of debt:
  • Total bankruptcy filings in 2011 — 1.4 million.
  • Number of homes that went into foreclosure from 2009 through 2011 — 7.6 million.
  • Mortgage delinquency rate in July 2012 — 7.58 percent.
  • Homes foreclosed upon in 2011 — 1 in 69.

As Americans continue to make slow headway against the financial doldrums that have kept our country in a prolonged recovery, debt repayment will be an important part of rebuilding our lives.

Bill Fay

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it seven years ago, helping birth into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering college and professional sports, which are the fantasy worlds of finance. His work has been published by the Associated Press, New York Times, Washington Post, Chicago Tribune, Sports Illustrated and Sporting News, among others. His interest in sports has waned some, but his interest in never reaching for his wallet is as passionate as ever. Bill can be reached at

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