Problem debt is putting stress on family relationships, damaging children and trapping families in a downward spiral of borrowing, according to a new report by The Children’s Society and StepChange Debt Charity.
The Debt Trap report, which is backed by the Archbishop of York, reveals that nine out of ten families in problem debt have had to cut back on essentials like food, clothing or heating for their children in order to keep up repayments.
Alarmingly, a third of families have had to borrow money to pay for essentials for their children in the last year.
The report coincides with The Children’s Society’s launch of The Debt Trap campaign, which aims to expose the impact of debt on children’s lives. The 2.5 million children in families with problem debt are more than twice as likely to be unhappy at school and be bullied because they don’t have the same things as their friends.
The Archbishop of York, Dr John Sentamu, said: “Parents living in poverty face incredibly difficult choices. What is to come first? Heating your home or putting food on the table?
“Parents want to make the best choices for their family, but low wages, expensive childcare and inflexible jobs make this very difficult.”
The report calls for a number of measures to combat the worst effects of debt on families, including ‘early warning systems’ so creditors are warned of customers’ financial difficulties early on.
It also urges wider access to debt support, better financial education for children, restrictions on advertising by payday lenders to children, and savings account pilots for children through credit unions.
The Debt Trap report was released just as The Money Charity released its Debt Statistics. Citing new figures from the Bank of England, it said the UK was currently seeing the biggest increase in loans and overdrafts for individuals since February 2008. The rise in total consumer credit, which includes credit cards, is at its highest since September 2012; the average consumer borrowing (including credit cards, finance deals, overdrafts and unsecured loans) was £3,184.
l StepChange Debt Charity, 0800 138 1111.