Three out of ten adults in Yorkshire and Humberside (31%) say they would be most likely to take on extra debt if they were faced with a sudden gap in their finances, according to new research from R3, the insolvency trade body. This is slightly lower than the national average of 34%.
Twelve percent of people in the region who were surveyed by Savanta ComRes for R3’s latest Personal Debt Snapshot say they would be most likely to use a credit card if they were faced with a sudden gap in personal finances, compared with 13% across Britain. Ten percent would ask family or friends for a loan (11% nationally), 5% would use their overdraft (7% nationally), 3% would apply for a bank loan (2% nationally), and 1% (the same as the national figure) would apply for a payday loan (a combined 31% in Yorkshire and the Humber).
Positively, over half (53%) of respondents in the region say that they would be most likely to use personal savings as a solution to an unexpected gap in their personal finances. This is slightly higher than the UK-wide figure of 48%.
Eleanor Temple, chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds, said: “A high proportion of adults in our region are very vulnerable to financial shocks.
“It’s encouraging that over half of adults in Yorkshire and Humberside have a financial cushion available to them, but it’s equally discouraging that plenty of others would feel forced to borrow to cover a gap in their finances.”
Eleanor adds: “Low interest rates do make borrowing more affordable in the short-term, but getting into debt can make that gap in finances even bigger over time. It can lead to a cycle of debt and stress which is hard to break, especially when emergency borrowing is added to pre-existing debt.”
Worryingly, in Britain overall, 3% of adults would cover a gap in finances by not paying rent or utility/telecoms bills.
Eleanor comments: “Skipping other bills is an option of last resort, and it’s a concern that some people find themselves in this situation. Skipping bills can store up problems for later.”
She concludes: “The first step for anyone who is concerned that what they owe may outstrip what they earn – even if it’s temporary – is to speak to a qualified expert, like an insolvency professional. They’ll be able to help you fully understand your finances and the options you have for resolving the issues you face. And the sooner you seek advice, the more options you’ll have – and the more time you will have to make a decision about how you move forward.”