Millions of children being damaged by problem debt

Written by: HTU | Published:

Families with problem debt are a total of £4.8 billion in arrears to their creditors – and the impact on their children can be devastating

Bullying, anxiety, reduced food and heating at home, and cutting back on clothes – the extent to which as many as 2.4 million children are being damaged as a result of problem debt has been revealed in a new report.

The Debt Trap says that the families of these children are up to £4.8 billion behind on the payment of household bills or loans – the equivalent of £3,437 per family.

A further five million children are in families that are struggling to keep up with repayments and at serious risk of falling into problem debt.

It says that relationships within these families are being put under tremendous stress and children are being “damaged” in a number of ways.

A third of families say their children are less able to take part in educational activities as a result of the problem debt, while a fifth say the situation is affecting their child’s concentration in school.

Children’s ability to do homework and to form positive relationships with their peers is also affected, the researchers found.

In fact, children aged 10 to 17 in these families are more than twice as likely to be unhappy at school because they “don’t have the same things as their friends”. They are also more than twice as likely to be victims of bullying for the same reason.

Furthermore, 58 per cent of the children say they worry about their family’s financial situation, with 

47 per cent saying it causes arguments in the family. 

The report, which has been published by The Children’s Society and StepChange Debt Charity, is based on a study involving 2,000 UK families with dependent children, a survey of more than 4,400 adults, in-depth interviews of parents with children facing problem debt, and focus groups with some of the young people themselves.

It calls for action to limit the “destructive impact of debt on the lives of children and their families”.

It finds that families are often trapped in the situation where they have “little alternative” but to take out credit to pay for necessities such as clothing, heating and food. A third of all families had to borrow money to pay for essentials for their children in the last year, it adds.

The report states: “This is part of a ‘debt trap’, with families subsequently finding that keeping up the repayments on credit means their children miss out on the basics. Nine out of 10 parents in problem debt have cut back on essential items for their children within the last year so they could keep up payments on debts.”

A key finding in the report is a lack of support for families, with 84 per cent saying they would have liked more help earlier. Furthermore, 42 per cent of parents feel they have been treated badly, with payday lenders being the most likely to treat them negatively. And many who sought support from local authorities or the creditors themselves said the services provided were not helpful.

The charities are now calling for changes to how creditors treat families with children who fall behind on bills and repayments. 

A joint statement added: “The government should review whether the protection for children against the harm caused by debt collection – including evictions, bailiffs and court action – is fit-for-purpose and consider developing a ‘breathing space’ scheme to give struggling families an extended period of protection from additional charges, further interest and enforcement action.”

Regulators should also ensure that creditors have “early warning systems” in place, so they know when their customers are facing financial difficulties and can offer advice and support. 

The report’s authors also say that children should be learning about borrowing from their schools and families, rather than from advertising by lenders.

It states: “A sound education on debt and money management may help to prevent young people getting into debt when they become young adults – making them less vulnerable to the kinds of income shocks and expenditure pressures which can threaten to lead to debt problems.”

Only 21 per cent of children aged 10 to 17 in the study said that their school had taught them about debt and money management.

The Children’s Society has now launched a campaign – also called The Debt Trap – which aims to raise awareness of the impact of debt on children’s lives.

The work is being support by the Archbishop of York, Dr John Sentamu. He said: “Parents living in poverty face incredibly difficult choices. What is to come first? Heating your home or putting food on the table? Many choose to go without themselves so they can provide the basics for their children. Parents want to make the best choices for their family, but low wages, expensive childcare and inflexible jobs make this very difficult.”

Matthew Reed, chief executive of The Children’s Society, added: “We cannot allow children to pay the price of debt. With little savings to fall back on, it can take just one unexpected setback – like illness or being made redundant – to tip a family over the edge and into a debt trap that can feel impossible to escape from.”

Mike O’Connor, chief executive of StepChange Debt Charity, said: “This report is a stark warning to policy-makers, creditors and the wider society of the devastating effects of debt on children. This is not acceptable in a society that aspires to justice and fairness. We need concerted action to ensure financially vulnerable families are given ‘breathing space’ to help them get back on their feet.”

StepChange Debt Charity offers support to families via a free helpline on 0800 138 1111 or online at

You can download The Debt Trap at

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