Families in Financial Distress Are More Likely to Stay in Distress

New research from the St. Louis Federal argues that financial distress “is not only quite widespread but is also very persistent.”

According to credit report data, the researchers find that individuals who were in financial distress five years ago were about twice as likely to be in financial distress today when compared with an average individual.

In a new piece, the team focuses on a very extreme form of financial distress: consumer bankruptcy.

Their findings imply that households that have encountered an episode of financial distress in the past are 1.5 times more likely to delay payment today, compared to average households. That leads to a persistent state of financial distress for these families.

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