WASHINGTON–It isn’t just the lowest-income borrowers who are falling behind on their payments and feeling financial stress, according to a new report.
According to the National Foundation for Credit Counseling, the average client seeking help from credit-counseling agencies across the country now earns approximately $70,000 annually, with unsecured debt levels approaching $35,000, or half their annual income. Before the pandemic, the typical client enrolled in counseling earned approximately $40,000 annually and carried $10,000 in unsecured debt, or about 25% of their annual income, the NFCC said
Moreover, the NFCC said clients have rising debt-to-income levels and more are falling behind on payment plans, all of which has pushed the organization’s gauge of financial stress to its highest level since the nonprofit group began tracking consumer health in 2018, it said.
Stress Expected to Climb
The National Foundation for Credit Counseling now expects that its financial stress forecast—which weighs payment trends from consumers already in counseling against broader economic indicators—will climb in the current quarter, the Wall Street Journal reported.
“We are seeing a disturbing shift from discretionary debt to survival debt,” CEO Mike Croxson told the Journal.
The increasing number of missed payments by existing counseling clients is particularly concerning, Croxson told the publication, because those borrowers are already on structured repayment plans, with fixed monthly payments based on budgets designed to be manageable.
Other Data Points, Including Positives
As the CU Daily reported earlier, a separate new report this week from the Federal Reserve Bank of New York shows that U.S. household debt in some form of delinquency rose to 4.8% in the fourth quarter, the highest level since 2017.
Meanwhile, the Journal noted that while many banks and analysts have played down that increase as a return to prepandemic norms, the federal data also show a worsening concentration of stress among lower-income borrowers. In the credit-card and auto loan categories, serious delinquencies are near highs last seen in the aftermath of the 2008-09 financial crisis, the analysis stated.
“Some 13% of people who took out Federal Housing Administration mortgages aren’t current on their loans, an increase from a year earlier, according to a report from ICE, the financial services company formerly known as Intercontinental Exchange. FHA loans are typically geared toward first-time buyers,” the Journal stated. “There has been a big increase in FHA loans entering foreclosure.”
But as the Journal also pointed out, and as the CU Daily further reported, the Bureau of Labor Statistics reported the strongest job growth in more than a year last month, and consumer spending rose 2.7% in 2025. And inflation in January was lower than expected.
Double-Digit Enrollment Increase
“Still, credit counselors say there is economic fragility developing within many households,” the Journal said. “Several nonprofit counseling agencies, including Consolidated Credit and Money Management International, reported double-digit enrollment increases last year. These agencies provide one-on-one financial reviews and structured repayment programs in which creditors reduce interest rates and consolidate debts. In many cases, accounts in these managed plans are often reported as current rather than delinquent, muting signs of strain in traditional economic metrics.”
