The results of a recent online survey conducted by Opinions Market Research on behalf of MABS suggests that almost 1 million people are concerned about their future debt. The level of concern for those who are in debt regarding their future debt distress is rising and is being felt, particularly, in the 35- 54 year olds living in Dublin, the commuter belt and other urban/suburban locations. This concern is likely to increase further this month with the end of mortgage payment breaks.
The Money Advice and Budgeting Service (MABS), which is funded and supported by the Citizens Information Board, is preparing for the fall out as a result of Covid-19 and the increased level of debt distress.
This research was conducted by Opinions in June 2020 among a sample group of 1,007 adults in the Republic of Ireland that are concerned with current or future debt (corresponding to 34% or 1,256,000 of the adult population). The findings in this report are compared to results found in October 2019 (pre Covid-19) using the same methodology and sample to ensure accurate comparison over time.
Almost 8 in 10 (78%) of this cohort report their household financial circumstances have been impacted negatively as a result of Covid-19 (almost 1 million adults). This is unsurprising given the change in employment status witnessed over this time among debt holders.
Those on reduced salary equated to 15%, reduced time or days working (17%) made temporarily redundant (22%) or made permanently redundant (8%). A stark 62% in total.
Despite the very real negative financial impacts experienced, less than half of those impacted (48%) have taken action as a result, and of those worryingly 21% have sought assistance from a friend/family member, 11% have borrowed from a financial institution and 6% have taken money from a moneylender. Just 11% of those that have taken action have contacted a debt resolution or support agency to date.
However, of those within this group who have yet to take any action, almost 150,000 adults (12%) declared that they are likely to contact an agency in the future as a result of being negatively impacted by Covid-19. MABS was identified as the number one destination for this group.
It is interesting to highlight that for the under 35 year olds and those with families, in particular, while concern with debt remains high it is not quite at the same level as it was in October 2019 (down from 83% to 76%). Reasons stated for this change were:
- stress leading into the Christmas period was no longer a factor
- pandemic supports were cushioning the true impact
- there is a sense that “everyone has been impacted”.
The sense of shame associated with the level of debt has also fallen since October (down 7% to 49%). The phased reopening of society has also led to an increase in consumer confidence.
There is evidence to suggest that people “freeze in a time of crisis”-indicating that the real financial impacts are yet to come. “This will become evident with the end of the mortgage payment break this month,” said Michelle O’Hara, Regional Manager, South Leinster MABS.
In addition, the Courts will re-open in October and we predict an upturn in legal letters issued to those who have fallen into arrears on a variety of different loans. There are also additional costs including childcare for families and those parenting alone with the opening of schools. There are many who have lost employment or are on reduced hours and MABS very much welcomes the extension of the various State supports into 2021 for these people.”
Beyond the financial impact of Covid-19, MABS are also aware of the stress that debt brings to both individuals and their households. The research bears this out:
- 71% of those that have experienced a negative financial impact feel debt puts a strain on their personal relationships (over 900,000 adults).
- 64% of this group are reluctant to talk to anyone about problem debt
- 61% often have sleepless nights worrying about debt.
The clear emotional impact as a result of increased financial hardship coupled with the harsh economic realities that are emerging, indicate a very busy time ahead for MABS and other debt resolution and support agencies.
“Our helpline, messenger service and local services are dealing with clients who have a range of concerns from utility bills and credit card debt to more serious mortgage arrears difficulties. My key advice to people is to talk directly to your lender. If you find this difficult MABS is here to support you. We would strongly encourage you to contact us sooner rather than later,” said Michelle O’Hara, Regional Manager, South Leinster MABS.
Call the MABS Helpline on 0818 07 2000, Monday to Friday, from 9am to 8pm, WhatsApp 086 035 3141 or contact your local office.