LegalShield Index hits five-year high as mortgage delinquencies and inflation risks resurface
Foreclosure-related legal inquiries surged nearly 30% year over year in Q2 2025, signaling mounting financial pressure on US households amid persistent debt and growing inflation anxiety.
LegalShield’s latest Consumer Stress Legal Index (CSLI) climbed 4.4% from March to June, reaching 68.2, the highest level in more than five years, as homeowners increasingly sought legal help to navigate missed payments and escalating financial obligations. Foreclosure inquiries rose 13.3% over the quarter, pushing the Foreclosure Index to 46.8, up nearly 29% from a year ago.
“Debt is the common thread behind rising consumer stress,” said Matt Layton, senior vice president of consumer analytics at LegalShield. “Whether it’s missed mortgage payments, maxed-out credit cards, or mounting buy-now-pay-later balances, debt-fueled household spending is forcing people to ask a lawyer for help.”
The Consumer Finance Index also rose 8.7% quarter-over-quarter, reflecting a sharp uptick in legal inquiries about defaults, loan modifications, and other financial distress, as sustained inflation and high interest rates weigh on borrowers.
The US Consumer Price Index (CPI) is expected to have risen 0.3% in June, its largest monthly increase since January, largely due to rebounding gasoline prices and tariff-related goods. The annual inflation rate is forecast at 2.7%, up from 2.4% in May, according to economists surveyed by Reuters.
“While inventory front-running has mitigated the need to raise goods prices, it will become increasingly difficult for businesses to absorb higher import duties,” said Sarah House, senior economist at Wells Fargo.
Recent tariff announcements from president Donald Trump, set to take effect August 1, could further intensify cost pressures on imported goods, including from Canada, Mexico, Brazil, Japan, and the EU.
LegalShield’s findings arrive just weeks ahead of the Federal Reserve Bank of New York’s second-quarter household debt report, with Q1 data already showing troubling signs. Household debt hit a record $18.2 trillion, including a $199 billion increase in mortgage balances and a $6 billion rise in home equity lines of credit.
Overall debt delinquency rose to a five-year high of 4.3%, fueled by rising late payments on mortgages, HELOCs, and student loans, which resumed credit reporting this year after a five-year pandemic pause.
“LegalShield data tends to move ahead of official reports, and right now, it’s signaling deeper trouble,” Layton said. “In the coming weeks, we expect the next debt and foreclosure reports to reflect what calls to our provider lawyers are seeing—more households slipping into unsustainable financial territory.”
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While bankruptcy-related legal inquiries dropped 11.8% from Q1, they remain 8.8% higher than last year. warned that the short-term dip may reflect seasonal easing rather than a lasting improvement, with high debt and delinquency rates still looming.
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