More than 14% of households have negative wealth, meaning their liabilities exceed their assets, according to data released by the Federal Reserve Board of New York.
Households with negative wealth have annual incomes that are more than half what those with nonnegative wealth have — $39,077 vs. $86,309. About one-in-five homeowners have negative wealth, while 75% have non-negative wealth, largely due to the value of their homes.
Negative wealth households are more likely to be female, single, or minority. As well, single parents, especially single mothers, are more likely to have negative wealth. And, not surprisingly, negative wealth households are more likely to have a member who has experienced a deterioration in health during the past 12 months.
For those households where there is a small amount of negative wealth, less than $12,400, the majority of the liability is tied up in credit card debt, according to the study. For those with between $12,400 and $46,300 of negative wealth, the major problem is unpaid student loans. For those with more than $46,300 of negative wealth, the largest liabilities are unpaid student loans and outstanding mortgage balances.
