In 2024, bankruptcy filings in the U.S. increased by 14.2% compared to the previous year. Breaking this down, business-related filings rose by 22.1%, while non-business filings grew by 13.9%. [1] This rising trend shows that more individuals and businesses are facing serious financial challenges each year.

To understand where people and companies have the best opportunity for a second chance after experiencing financial difficulty, we conducted a study to identify the top states in the U.S. for financial recovery. Our research examined a range of critical factors, including state unemployment benefits, consumer protection laws, credit repair regulations, and property exemptions. By combining these measures, we aimed to determine which states provide the most supportive environment for rebuilding finances and achieving stability after experiencing financial difficulties.

Key findings from the research:

• California is the best state for financial second chances, scoring highly for consumer protection laws, credit repair laws and exemption laws ($600,000 homestead).
• New Jersey is the worst state for second chances, with minimal exemptions amounts and a maximum weekly unemployment benefit amount of $132 – the lowest out of all states.
• Washington offers the best unemployment benefits available in the U.S. with a maximum of $844 weekly, or a minimum of $201.
• North Carolina offers the worst unemployment benefits with a maximum of $350 a week and minimum of $15.
• Nevada, Utah, and Louisiana rank highest for credit repair laws, offering a total of $100,000 surety bond protection, a five-day cancellation period to consider high-pressure purchases, and a 10-day refund period for faster reimbursements.
• The research found that Delaware has the highest average hourly attorney fees ($423), followed by New York ($398) and California ($391).

The best states for financial second chances

The study analyzed 16 metrics covering credit repair laws, exemption laws and consumer protection laws to determine the best and worst states for starting again after facing financial difficulties.

The top 20 states for second chances

Despite stigma around the subject, debt is a common part of everyday life in America today. In fact, U.S. consumer debt has reached a record $18.388 trillion. [1] In addition to unexpected costs, many people take on debts during important milestones in their lives: getting their first car, going to college, or purchasing their first home with a mortgage.

Because of this, the types of debts we take on – and when we take them on – change across our lifetime. To find out how much the average American accumulates in debt over their lifetime, we analyzed four common different debt types and average interest amounts (mortgages, student loans, auto finance, and credit card debt), and how much someone could be expected to owe per year of their life. The study also considered how the average debt in each category varied per state.

Key Findings:

• Debt peaks at age 61, the typical age of a second-time homebuyer, with a total debt amount of $370,259.
• On average, the total amount of debt an American can expect to pay off in their lifetime is $1,786,810.
• Lifetime residents of Hawaii can expect to pay off debts worth $2,570,976 in their lifetime – more than any other state.
• Lifetime residents of West Virginia can expect to pay off debts worth $1,391,240 in their lifetime – less than any other state.

How does debt fluctuate as you age?

Considering the typical milestones in life – such as buying your first car, attending college, and purchasing your first home – alongside other standard occurrences, like accruing credit card debt, the average amount you can expect to be in debt fluctuates across a lifetime.

Between the time an American turns 18 and the average mortality rate, which is 78 in the U.S., [2] they can expect to have accrued an average of $1,786,810 in debt across their lifetime. But at which ages can Americans expect to be most and least debt-burdened?

A popular 2010 study reported that happiness peaks at an income of $75,000, and that any increase above this doesn’t necessarily guarantee an increase in well-being. [1] A 2023 study pushed the goalpost considerably further, estimating that well-being increases up to an annual salary of $500,000. [2]

But at what point might someone become psychologically detached and resigned to their debt? To find out if Americans do experience “debt numbness” (and at which point it is reached), a survey of 1,186 people was conducted, comparing stress levels with amounts of debt. Using this data, the study could then examine where stress levels plateaued or even declined, and which types of debts are most and least stressful.

Key Findings:

• Americans become “debt numb” when debts total $75,000 to $99,000, with stress levels peaking at an average of 4.2 out of 5.
• Respondents were more stressed by debts totaling $2,500 – $4,999 (3.3 out of 5) than they were by debts totaling more than $500,000 (2.5 out of 5).
• Credit card debt is the most stressful form of debt (4 out of 5).
• Nearly half, (48.1%) of 18-26 year-olds have a stress level of 2 regarding their current debts – the age group least worried about their debts.
• 47% of Americans worry about their debt every day.
• Half (50%) admit to actively avoiding looking at their bank statements.
• More than half (54.6%) of respondents feel ashamed or embarrassed about their debt.

When do people become numb to debt?

If you’re in debt, you’re not alone. In fact 98% of the 1,186 people surveyed said they were currently in some form of debt.

But how stressed are people about their debt? The study asked respondents to rate their stress levels on a scale of 1 to 5, with 1 being “I don’t think about it at all” and 5 being “It causes me extreme stress”.

The degrees of stress respondents felt about their current debt varied by the amount. Those with minimal debts of less than $500 reported the lowest stress levels of 1.5/ 5, and stress increased as the volume of debt increased, reaching a peak at 4.2/5 when a respondent’s debts totaled $75,000–$99,999.