BIRMINGHAM, Ala. — Alabama once again leads the nation in per capita non-business bankruptcy filings, with experts pointing to persistent poverty, limited access to healthcare, and weaker social safety nets as key reasons for the state’s outsized financial distress.
According to the latest available data, Alabama recorded 527.3 bankruptcy filings per 100,000 residents in 2024, the highest rate in the country and well above the national average. The state’s poverty rate remains well above the national figure—15.6% according to recent Census Bureau estimates, compared to 12.5% nationwide—with pockets of the state experiencing even deeper deprivation. Ten Alabama counties have poverty rates exceeding 25%, and only two have rates below 10%.
The financial struggles of Alabama households are compounded by higher rates of medical, student, and credit card debt in collections than the national average. Nearly 39% of Alabama households have at least one debt in collections, compared to 31% nationwide, while 21% of households have medical debt in collections versus 16% nationally. Student loan and credit card delinquencies are also higher in the state.
Experts say the state’s lack of expanded Medicaid, limited access to housing support, and fewer protections for workers compared to other states leave residents more vulnerable to financial shocks. Alabama is one of the few states that has not expanded Medicaid under the Affordable Care Act, which limits healthcare access for low-income residents.
Despite recent improvements in employment—Alabama’s unemployment rate stood at 3.1% in November 2024—the benefits have not reached all corners of the state, especially rural areas where access to essential services remains limited. Over 42% of Alabamians live in rural counties, where distance from hospitals and other critical services can exacerbate financial and health challenges.
The high rate of non-business bankruptcies reflects not just individual misfortune but also systemic issues that leave many Alabamians with fewer options when faced with unexpected expenses or job loss. The state’s bankruptcy rate is more than 80% above the national average relative to population, a distinction it has held for many years.
While some urban areas, such as Birmingham and Mobile, have seen modest improvements in employment and poverty rates, large swaths of the state continue to struggle. The pattern underscores the need for broader economic and social supports, according to financial analysts and advocates.
Alabama’s situation is shared by neighboring states in the South, which collectively account for 38% of all U.S. bankruptcy filings despite making up just 25% of the population. The region’s high rates are tied to factors including cost of living, healthcare access, income volatility, and differences in state collection laws.