Vermont Ranks 49th in Financial Distress

Vermont's brand is modesty. Small towns, town meetings, covered bridges, a state government that mostly tries to do right by people. No one moves to Vermont for the tax breaks. They move for the quiet, or they never leave because the place gets into your bones.

By every measure we track, it works. Vermont ranks 51st out of 51 on the State Distress Index. Dead last. A score of 34.5, which places it firmly in the Healthy zone. Not a single debt metric above the national average. Unemployment at 2.6%. Medicaid expanded. The best-performing state in the country by the numbers, and it isn't particularly close.

And yet the single largest contributor to Vermont's distress score is Safety Net Gap. The state that did the most still has a safety net that grades out as Weak. Which raises a question that's harder to sit with than any crisis-level headline. If this is what success looks like, what exactly did we think we were measuring?

The contradiction sharpens when you look at the specifics. Vermont's credit card delinquency rate is 9.0%. That's well below the national 12.4%. Comfortable margin. But in 2019, that same rate was 5.8%. A 55% increase in six years, quietly compounding inside a state where everything looks fine from the outside.

Auto loan delinquency is 2.8%, roughly half the national rate. Mortgage delinquency is 0.62%, about a third below the national 0.94%. Debt per capita sits at $52,910, meaningfully under the U.S. figure. These are good numbers. Genuinely good. But the trajectory of the credit card data tells a different story than the snapshot. Vermont's households aren't in crisis. They're slowly losing margin. The gap between income and cost is widening at the same rate it is everywhere else. It's just starting from a better position.

The mechanism is familiar. Housing costs in rural Vermont have climbed since the pandemic-era migration wave. Property taxes fund the state's school system directly, and those bills keep rising. The credit card absorbs the difference. Not dramatically. Not at Florida's pace. But steadily, and in a state with a median household income that ranks 22nd nationally, the cushion is thinner than the topline numbers suggest. Vermont isn't failing. It's eroding.

Here's what the numbers actually look like when you set Vermont next to the national averages, side by side, across every metric we track.

Vermont filed 283 bankruptcies in the most recent 12-month period. That's 43.7 per 100,000 residents, which ranks 49th nationally. Only two states file at a lower rate. The year-over-year increase was 10.1%, roughly in line with the national pace. Nothing alarming in isolation.

The part that's worth sitting with is the Chapter 7 share. At 77.7%, Vermont's bankruptcy filers overwhelmingly choose liquidation. Chapter 13, the repayment-plan option that lets you keep your house, accounts for just 21.9%. In Florida, that share is 28.3%. In states across the South, it's often higher. Chapter 13 is the bankruptcy of homeowners fighting to stay. Chapter 7 is the bankruptcy of people who've already lost, or who never had enough assets to protect in the first place.

Vermont's low filing rate means we're talking about small numbers. But the composition suggests that when a Vermont household does reach the breaking point, there's usually not a house to save. The median home price has risen sharply since 2020, and the $125,000 homestead exemption doesn't stretch as far as it once did. People aren't using the bankruptcy court as a housing preservation tool. They're using it as an exit.

Vermont is a judicial foreclosure state. Every foreclosure goes through the Superior Court, Civil Division. That process is slow by design, though the state doesn't publish a standard timeline the way some judicial states do. The deliberateness of the court process functions as a buffer. It gives homeowners time. Whether they use that time productively depends on the resources available to them, and in much of rural Vermont, legal aid is sparse.

The homestead exemption protects up to $125,000 in equity. That sounds substantial until you consider that the median home price in Chittenden County now exceeds $450,000, and even in the Northeast Kingdom, pandemic-era appreciation has pushed values well above where they sat a decade ago. The exemption was meaningful when Vermont homes cost less. Now it covers a fraction of the equity in many properties. And Vermont offers no anti-deficiency protection. If a foreclosure sale doesn't cover the mortgage balance, the lender can pursue the borrower for the difference.

The legal architecture, in other words, is adequate for a state with low distress. It's not built for a state under pressure. Which is fine, as long as the pressure never arrives. The question is whether "best in the country" is the same thing as "prepared."

Vermont scores 49.0 out of 100 on our Safety Net Index. That's Weak. Rank 27 of 51. For the state with the lowest distress score in the nation, this is a striking mismatch.

Vermont expanded Medicaid, and 18.7% of the population is enrolled. SNAP covers 9.5% of residents, about 61,700 people. The Homeowner Assistance Fund is winding down. These are real programs reaching real people. But the overall safety net score still falls below the midpoint, which means the infrastructure of support, relative to need, has gaps.

I think the part that's underappreciated is what this says about the national baseline. Vermont did the things. Expanded coverage. Kept unemployment low. Maintained relatively conservative household debt. And the safety net still grades out as inadequate. If Vermont is Weak at 49.0, and Florida is Weak at 43.1, the difference between the healthiest state and the fifth most distressed is six points of safety net capacity. That's not a gap between two approaches to governing. That's a shared floor.

The county map

Vermont has 14 counties. Thirteen score Normal or Healthy. One, Orleans County in the Northeast Kingdom, scores 50.4. Elevated. It's the only county in the state above the Normal threshold, and nationally it ranks 1,563rd out of 3,144 counties. Solidly middle of the pack for the country. A crisis nowhere else. Vermont's outlier.

Orleans County's dominant driver is housing cost burden. Essex County, next door, scores 49.0 with income and poverty as its primary strain. Bennington County, in the state's southwest corner, comes in at 45.3, also driven by housing costs. All three sit in the parts of Vermont that tourists photograph but don't live in. The gap between the most distressed county and the least, Washington County at 28.9, is 21.5 points. That's modest compared to Florida's 46-point chasm. But in a state this small, 21.5 points means that someone in Montpelier and someone in Newport are living inside measurably different economies. (They're about 50 miles apart.)

The county map reveals something the state average smooths away. Vermont's distress isn't evenly distributed. It clusters in the rural north and the rural south. The healthiest counties are the ones with state government, university employment, or proximity to the Burlington metro. The pattern is not unique to Vermont. But the fact that it persists here, in the least distressed state in the country, says something about what even the best averages conceal.

CFPB complaints

Vermont residents have filed 714 mortgage-related complaints with the CFPB since 2012. That works out to 110.3 per 100,000 residents, which ranks 23rd nationally. For the healthiest state in the country, that's a surprisingly high complaint density. The top issues are trouble during the payment process, loan modification and foreclosure concerns, and loan servicing disputes. Companies responded to 97% of complaints within required timeframes. (Responded to and resolved remain, as always, different things.)

The complaint rate suggests that even in a state with low delinquency and low foreclosure volume, the mortgage servicing experience is generating friction. The problems may be smaller in scale. They are not absent.

What the State Distress Index is measuring

The score of 34.5 is built from 6 data dimensions, weighted by how much each contributes to the overall distress picture.