People living in the region are 11 per cent more in debt that the national average, according to new research by insolvency trade body R3.As part of its latest Personal Debt Snapshot, R3 found that, after excluding mortgages and student loans, the average indebted adult across the North East, Yorkshire and Humberside owes around £6,400, compared to the national average figure of just over £5,700.
Twelve per cent of adults in the region who are in debt said they currently owed £10,000 or more, while seven per cent admitted to debts of over £20,000.
And with wages in region being around ten per cent lower the national average, R3 regional chair, Neil Harrold, is advising local people to ensure they take proactive steps to address their debt problems if they start to think they’re getting out of hand.
Forty-three per cent of those surveyed in the region said they were concerned about the amount of debt they were in, with 13 per cent saying they were very or extremely worried about their financial situation.
For those in the region who are concerned about debt, almost half (49%) said that money owed on credit cards was their primary concern, followed by debt relating to overdrafts (22%), mortgage repayments (16%) and bank loans (16%).
In terms of future financial prospects, the proportion of adults in the region who think their financial situation will improve over the next six months (20%) remains ahead of the proportion (13%) who think it will worsen in that time.
But despite this, 46% of regional survey respondents say they sometimes or often struggle to make their money last until payday, with the cost of food, household energy bills and fuel/transport costs being the most frequently cited reasons for this.
Across the UK, the R3/ComRes’ survey of 2,000+ British adults found that the average owed by those in debt is equivalent to 11 weeks’ average weekly earnings for a UK worker (£503 per week) and seven months’ average rent in England & Wales (£792 per month).
Neil Harrold, North East chair of R3 and a partner with Hay & Kilner Solicitors, says: “The continued availability of cheap money and only low levels of wage growth have contributed to a significant proportion of adults in the region building up, once more, a sizeable amount of debt in the years after the financial crisis.
“Credit cards are consistently the leading cause of concern for those with debts. With today’s technology allowing you to pay ‘contactless’, and even through your phone, it can be easy to lose track of what you’re charging to your card. Without noticing, debts can begin to grow.
“There has been movement towards providing people in debt with a bit more breathing space to help them deal with their debts before it’s too late. The creditors’ petition level for bankruptcy has been increased from £750 to £5,000 while the government has been considering a statutory ‘breathing space’ from creditor action for those in debt, but attention must be paid too to encouraging people to seek early advice about unsustainable debt to prevent problem debt building up in the first place.
“The result of the EU referendum has brought us into a period of considerable uncertainty, and while there is no reason that debt levels should necessarily rise as a result, it will be very interesting to see in our next survey how people’s attitudes to their personal finances have been affected by the vote.
“The best course of action for anyone who feels their debts are becoming too great a problem is always to seeking professional advice as early as they can, rather than hoping the issue will just go away, so you have the widest possible range of solutions for getting things back on track.”