A third of adults would look to take on extra debt if faced with an income shock such as an unexpected bill or job loss, a survey has found.
Some 34% of people would be most likely to turn to borrowing to plug the gap in their finances, insolvency trade body R3 found.
And 3% would simply stop paying rent or utility and telecoms bills in this situation – potentially leaving them at risk of losing their home, getting a bad credit history and seeing the size of their debts balloon.
If faced with a gap in their finances, one in seven (13%) would use a credit card, 11% would ask family or friends for a loan, 7% would use their overdraft, 2% would apply for a bank loan and a further 1% would apply for a payday loan, the survey of more than 2,000 people across Britain found.
Women and younger adults aged 18 to 34 would be particularly likely to turn to loved ones for financial help rather than a formal lender, the research found.
Meanwhile, nearly half (48%) of people surveyed would be most likely to use personal savings as a solution.
Home owners were significantly more likely to say that they would use personal savings to address an unexpected gap in their personal finances (55%) than those living in rented accommodation (34%).
R3 president Duncan Swift said: “A high proportion of British adults are very vulnerable to financial shocks.
“It’s encouraging that almost half of British adults 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.
Mr Swift continued: “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.”
He said that for those who are struggling: “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.”