Debt Consolidation

Renters in Mississippi, Louisiana and Tennessee Have Fallen the Most Behind on Payments

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Nearly 1 in 6 renters aren’t caught up on payments, according to LendingTree’s analysis of Census Bureau data from late September and early October. This is likely to get worse, as more than 1 in 4 renters say they have no confidence or only slight confidence in making next month’s payment.

With a federal eviction moratorium due to expire Dec. 31, 2020, and many statewide eviction moratoriums expired or expiring soon, struggling renters may soon find themselves without homes. To see where renters have fallen behind on payments, LendingTree researchers looked at state data, exploring the uneven impact of the coronavirus crisis. Here are our findings.

Key findings

  • 29% of Mississippi renters — top on our list — are behind on payments, nearly double the average national rate of 16.2%.
  • Only one other state — Louisiana (28.3%) — has more than a quarter of renters who say they’re behind on payments. Tennessee is No. 3 at 24.8%.
  • Montana (4.2%), Vermont (6.8%) and Utah (8%) have the lowest rates of renters behind on payments.
  • Assuming every adult who reported being behind on rent owes $1,097 — the median monthly gross rent in the U.S. — the combined amount owed would be $9.7 billion.
  • Looking at the states where renters say they have no confidence or only slight confidence to make next month’s payment, Mississippi (46.4%), Louisiana (42.8%) and Iowa (37.3%) top the list. On the other end of the confidence spectrum is Wyoming (11.1%), Montana (11.5%) and Washington and West Virginia (12.8% each).

Where renters are most behind on payments

The four states where the highest percentage of renters are behind on payments are in the South. And Southern states make up five of the top 10:

Higher rates of late payments among the top 10 states aren’t surprising given their economies. Mississippi and Louisiana, for example, have poverty rates in the 19% to 20% range — about double the U.S. average (10.5%) in 2019. In fact, each state in the top 10 had a poverty rate above the national average, though North Dakota’s margin was 0.1 percentage point.

The top 10 states also have median household incomes below that of the national average (outside of New York). And in half of these states, the difference was more than $10,000 a year. That can make it more difficult to stay up to date with rent, especially during a pandemic.

Only two of the top 10 states — New York and Illinois — have current statewide holds on evictions, in addition to what’s in place federally.

A demographic look: Behind on rent

In some cases, the demographics of those who report being behind on payments play out as expected, with lower-income residents having a tougher time, for example. But that isn’t true across the board:

Although being older is typically indicative of a higher salary (which can translate to an easier time making rent payments), the most hard-hit segment is those ages 40 to 54. And those in the 18-to-24 age group report fewer instances of falling behind on rent than almost every other group, with the exception of those 65 and older.

And those who reported borrowing money from family and friends in the past seven days to meet spending needs were slightly more likely to report falling behind on rent than those who used Supplemental Nutrition Assistance Program (SNAP) payments in the same time frame.

Where renters have least confidence in making next payment

Mississippi and Louisiana lead the way here, too, with residents reporting little to no confidence making next month’s rent payments:

The key difference here (compared to states with the highest percentage of residents falling behind on payments) is that three Northeast states are in the top 10.

There’s also a wider margin between the first- and last-ranked states for these two lists:

  • There’s a 25-percentage-point gap among those behind on payments
  • There’s a 35-percentage-point gap among those who say they have little to no confidence about being able to make next month’s payments

That suggests a potential increase in Americans who will fall behind on rent. The large gap isn’t surprising, however, according to Tendayi Kapfidze, LendingTree’s chief economist.

Part of this, he said, is the loss of vital supplemental unemployment payments. The $600 supplemental unemployment benefits ended nationwide at the end of July, though they were later replaced with a $300 benefit that some states were slow to implement. That could leave a lot of people without the support they need to keep up with rent.

Also, four of the top 10 states had higher rates of job losses due to the COVID-19 pandemic, according to a recent LendingTree study:

  • Michigan
  • New York
  • Connecticut
  • Pennsylvania

And renters in general are often at a higher risk of financial distress, too, Kapfidze said.

“A lot of renters unfortunately don’t have a rainy-day fund or an emergency fund,” he said. “If you lose your job, that very immediately puts you at risk of being able to meet your rent payments.”

A demographic look: No confidence

Nearly 26% of Americans report having little to no confidence in their ability to make next month’s rent payment on time. For the most part, these levels mirror the figures for those who reported being behind on rent:

Similar to those reporting they were behind on rent, a lower income is correlated with a higher rate of little to no confidence in being able to make next month’s rent.

But while Latino respondents were less likely than Asian respondents to fall into the behind-on-rent category, they are more likely to report being unable to make next month’s payment. Black Americans were still the most impacted racial segment here.

5 things to do if you can’t pay next month’s rent

Making rent during a pandemic, when more than 12 million Americans are out of work, can be a difficult task. Finding yourself unable to make rent can bring up other issues, like anxiety about your living arrangements and being able to pay for other necessities, including groceries.

Here are a few tips to help you deal.

Know your rights

Evictions for certain tenants (like those who’ve lost a substantial amount of income) are on hold through the end of 2020 at a federal level. And there may be additional local or state-based moratoriums in place, depending on where you live. Be sure to find out if you fall into protected categories and what that means for your circumstances.

Consider a personal loan

A personal loan can provide renters the opportunity to stay up to date from month to month, with funds landing in your account quite quickly, depending on the lender. But it’s important to keep in mind that you should consider other options first. That way, you may be able to avoid interest costs. But if you have bad credit, this could be a serious consideration.

Think about decreasing spending

If you believe that it’ll be unlikely that your circumstances will change in the near future (by early 2021, for example), it may be time to consider larger cost-cutting measures, such as moving into a cheaper apartment or getting rid of other expenses. Taking advantage of falling rent prices in major cities, for example, can help you stretch your budget further in the future.

Consider a low-interest credit card

Another funding option, credit cards can help renters get by in times of financial difficulty. Again, this should be used as a last resort, rather than your first option. And beware: If your low-interest card includes a 0% APR introductory period, it’s important to pay off the balance before that period ends, or else you’ll owe a lot more in interest than expected.

Look into side-income opportunities

Boosting your income is another way to make your finances work for you. Side gigs based on your current skills and that require a minimum amount of time are the best options as they allow for flexibility. But, of course, it’s important to tailor these options to your needs and availability. “It can be hard because the economy is not doing great,” Kapfidze said. “But, certainly, it doesn’t hurt to try.”

Methodology

LendingTree researchers analyzed U.S. Census Bureau Household Pulse Survey data from Sept. 30 to Oct. 12, 2020, to rank the states where renters are most behind on payments, as well as where renters have the least confidence to make next month’s payments.

 

Debt Consolidation Loans Using LendingTree