Debt crisis deepens: Research reveals average personal debt in NI rises to £13,000

Ilias Lambrou (PHD Researcher), Sinead Campbell (Advice NI) and Sean Breen (Consumer Council)

A new report, commissioned by the Consumer Council of Northern Ireland to explore Advice NI’s debt advice service, has found that people are dealing with debts 42 per cent higher today than in 2022/23.

The findings have revealed that the average amount of debt people across Northern Ireland are dealing with stands at £12,989, a significant increase from £9,136 in 2022/23, £7,085 in 2021/22 and £6,578 in 2020/21. The sharp increases indicate that people are often getting into more debt before they reach out for help.

In 2023/24, Advice NI’s debt service, which is supported by the Department for Communities, dealt with 3,385 people with debts amounting to £44.1 million.

The research focused on data collated via Advice NI’s debt service including feedback from clients and debt advisers. It found that it is everyday costs that are putting greater financial pressure on people, with the most common causes of debt in Northern Ireland including housing, household bills, and high interest lending often taken out to cover essentials such as food.

Last year, the debt service dealt with a 46 per cent rise in mortgage debt, with average arrears totalling more than £58,000 per agreement. Rates arrears also increased with an average debt of £4,372 per agreement. Whilst the number of people in rent arrears slightly decreased in 2023/24, those in debt owed over £1,000 more to their landlord compared to the previous year, with an average debt owed of £3,171.

Unprecedented surges in telecoms, and higher energy costs have also resulted in mammoth increases in debts to suppliers - broadband debt is up 367 per cent, gas up 112 per cent, electricity up 95 per cent, and mobile phone up 85 per cent. Nearly four in five people who participated in the feedback surveys said they had turned their heat off because they couldn’t afford it.

A lack of resilience was also revealed as a common thread amongst those in debt. Two in three are living below the poverty line, a third have little to no savings, and a fifth have poor mental health.

Sinead Campbell is Head of Money, Debt and Quality at Advice NI, said:

“The research is concerning. There is a clear upward trend in the number of people falling into debt because the cost of living outweighs their household budget. This means that not only are more people in debt, but more people are likely to be at risk of debt too.”

Worryingly, the report has also revealed that high interest lending is on the up. Advice NI cases related to illegal lending or loan sharking have risen by 16 per cent since last year with the average debt per client now over £3,000. These unlicensed moneylenders charge exorbitant interest rates, often trapping vulnerable people. Advisers reported that people are turning to Buy Now Pay Later loans, Store Card credit and Catalogue debt more frequently.

Furthermore, the research also found that two in every three people waited for at least 12 months before reaching out to Advice NI for debt support, and almost half of them waited for over two years. Yet after receiving advice, 82 per cent of people felt more in control of their finances, and 93 per cent felt better able to manage their money.

As Sinead explains, seeking support early can be crucial for those living with debt. She said:

“Last year, we were able to get £855,871 in financial gains for our clients, that’s a 59 per cent increase from the previous year. This means we increased someone’s income through benefit entitlement checks, securing an insurance pay out on their behalf or getting debt written off. By doing so, we create the opportunity for people to reduce their debts and free their financial futures. Debt advice is a lifeline for people who often struggle to navigate the complex world of debt on their own.

“We recognise that reaching out for support can be daunting, but our advisers provide a free, confidential and impartial debt service. Every day we see the detriment that debt can have on people’s wellbeing and our aim is to alleviate the burden as much as we can and ensure people know that expert help is available – they don’t need to feel shame or judgement.”

Sean Breen, Head of Financial and Postal Services at the Consumer Council of Northern Ireland said:

“This is the fourth report that we have commissioned with Advice NI as these provide us with valuable insights into the lived experiences of consumers, particularly those who are in debt. We look forward to collaborating with Advice NI to ensure consumers are represented and are provided with appropriate and effective solutions to dealing with debt.”

Advice NI and the Independent Advice Network have 65 members and 300 advisers across Northern Ireland, all providing free, impartial and confidential advice.

Those in need of support are encouraged to visit adviceni.net or Freephone 0800 915 4604.