Debt Delinquency Is Getting More Severe. 1 in 4 MMI Clients Have at Least One Charged-Off Account.
One in four clients at the nonprofit credit counseling agency Money Management International had at least one unsecured debt that a lender had written off as a loss in the first nine months of 2026, up from one in five in 2020. The average balance in collections reached $11,200, up 38% over the same six-year span.
An account becomes delinquent when a borrower misses a required payment. A charge-off generally comes after an extended period of missed payments, when the lender records the balance as a loss, and the lender may still seek repayment.
MMI’s analysis covers the agency’s clients from January through September, using the same nine-month period in 2025 for its year-over-year comparisons. The charge-off figures describe people who sought help from the nonprofit.
The Federal Reserve Bank of New York, which tracks a nationally representative sample, found that the rate at which credit card balances became newly delinquent was largely steady in the second quarter. Its third-quarter report is scheduled for November 10.
MMI’s counseling volume rose 9.5% from a year earlier. Its clients owed an average of $40,200 in unsecured debt, up from $38,300 over the same period in 2025. That category includes credit cards and personal loans issued without collateral, such as a home or car.
“The story behind the numbers is all about the rising cost of living,” said Ted Rossman, MMI’s principal consumer finance analyst. He pointed to groceries and gasoline alongside medical bills, car repairs and home repairs as expenses that can leave households relying on credit when wages fall short.
Personal loans are showing up more often when clients first contact the agency. Through September, 46% of new clients had an unsecured personal loan, up from 42% in 2025. The share reached 48% in the third quarter, compared with 35% in 2020. The average balance on those loans rose 11.5% from a year earlier, to $19,300.
Rossman said “Many clients have used personal loans for debt consolidation, but paying off debt with more debt is risky,” said Rossman. “You can end up with more debt than before if you accumulate new credit card debt before the old debt, now in the form of a personal loan, is paid off.”
Gen Z remained the generation with the lowest average unsecured debt among MMI clients, at $20,200. Its average balance rose 10.5% from a year earlier. The number of Gen Z clients climbed 31%, the fastest increase of any generation the nonprofit tracked.
Among the 10 states where MMI counseled the most clients, Pennsylvania posted the fastest growth in client volume, at 24%, followed by Georgia at 17% and Texas at 15%. Virginia and North Carolina both saw more clients and higher balances. Average unsecured debt climbed 15% to about $45,900 in Virginia and 10% to $41,600 in North Carolina.
The surge in demand also showed up in repayment plans. More than 2,500 clients started plans in September, MMI’s busiest month for new enrollments since March 2011. That pushed the number of active plans above 60,000 for the first time since 2017. The agency passed $1 billion in managed debt in June and was still above that threshold at the end of September, its highest level since 2013.
