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12/08/2011

Half the nation concerned about their debts

Nearly half of individuals (47%) are concerned about their debts, according to the latest wave of R3’s, the insolvency trade body, Personal Debt Snapshot. The quarterly tracker of the nation’s finances reveals a 7% rise in debt concern, compared to this time last year.

Of those who are concerned about their debts, credit card debt continues to dominate fears for 53% of individuals; an increase of 5% on last quarter. Concern about certain types of debt has increased this quarter: Payday or other short term loans (up 2%), hire purchase (up 3%) and store cards (up 1%); while worry about secured lending has reduced such as mortgage repayments (down 4%) and bank loans (down 2%).

Frances Coulson, R3 President comments:

“Households that are already struggling may find traditional lenders unwilling to provide further credit and are therefore drawn to short-term credit solutions. Individuals turning to short-term loans and credit cards should be wary of the high interest rates that often accompany these products. Overall debt can quickly snowball out of control.

“Concern about secured lending is also likely to have fallen due to the Bank of England continuing to keep interest rates at an historic low. Households have begun to feel comfortable that their mortgage repayments will remain as they are for the foreseeable future.”

Over a quarter (27%) of people are saving less then they usually do, equating to 13 million individuals, this compares to 24% in July last year and 32% in April 2011. While one in five (21%) consumers are putting off big financial decisions, compared to 14% a year ago and 28% last quarter.

Frances Coulson continues:

“Early 2011 was a tough period as individuals struggled to keep control of their finances and felt uncertain about the future. It is encouraging to see people have started to bolster their savings and pay off their debts. But we must remember that financial distress is still higher than it was a year ago. Delays in taking big financial decisions are up considerably on last year, indicating that the public is still hesitant about what the coming months have in store.”

Allied to this is fear of redundancy: the overall fear of redundancy is twice as high as this time last year. Twice the amount of people in the public sector fear redundancy compared to private sector workers, with one in five public sector workers raising their concerns, compared to 9% of private sector workers.

Frances Coulson said:

“Employees in the public sector are clearly wary that more job losses are yet to be announced and the full force of public sector cuts is still to be felt. We know that unplanned changes of circumstance, such as job loss, are key triggers of insolvency.

“With around six million people employed in the public sector in the UK, significant redundancies could result in increased insolvency levels. More people have started saving and paying off their debts, so these reserves should serve them well if they do face a period of unemployment. Those struggling with debt should seek financial advice rather than dealing with the distress on their own.”

ENDS

For further information please contact:
Charlotte Towerton, R3 External Communications Officer
t: 020 7566 4203 m: 07918 161 291 e: charlotte.towerton@r3.org.uk


Methodology note:
ComRes interviewed 2047 GB adults online between 22nd and 24th July 2011. Data were weighted to be representative demographically of all GB adults. Where population figures are mentioned, estimates have been extrapolated using the percentages from the results and adult population figures for Great Britain available from the Office of National Statistics.


R3 Press Office

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see www.r3.org.uk for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
     
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.