Problem debt is putting stress on family relationships, damaging children and trapping families in a downward spiral of borrowing, according to The Debt Trap, a new report from The Children’s Society and StepChange Debt Charity.

Two and a half million children live in families with problem debt, who are behind on £4.8 billion of household bills and loan repayments. A further five million children are in families that are struggling to keep up with repayments and risk falling behind.

Bishop Tim, who chairs the Children’s Society Trustee Board, says: “The Debt Trap Report is a powerful reminder of the reality of the lives of many families in our country. The harsh state in which many children are living due to debt and the related problems is important for us all to know.

“These reports also give us as churches some Theological Reflections and practical suggestions for actions. I encourage all our communities to reflect and use these helpful resources.”

This new report – also backed by the Archbishop of York – for the first time lifts the lid on the devastating impact debt can have on children. Their findings show that children are suffering worry and anxiety, bullying and going without essentials as their families are trapped in problem debt.


The impact

  • Bullying – 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.
  • Worry – More than half of children (58%) in families with problem debt say they worry about their family’s financial situation
  • Family – Half of children in families with problem debt (47%) say it causes arguments in the family.
  • Going without – Nine out of ten families in problem debt say they have had to cut back on essentials like food, clothing or heating for their children in order to keep up repayments.
  • Early exposure to debt – More than half of children aged 10 to 17 said they saw advertising for loans ‘often’ or ‘all of the time’. But only one in five children said that their school had taught them about money management and debt.


The debt trap

Household budgets up and down the country are under strain, but families with dependent children face extra pressures as they are more likely to face unexpected bills and are less able to cope with sudden financial shocks e.g. redundancy, reduced hours or illness.

As families begin to struggle financially, many feel that taking on credit is the only way to make ends meet – a third of all families have had to borrow money to pay for essentials for their children in the last year. This often marks the beginning of the debt trap as credit repayments begin take up a larger proportion of income and families find themselves cutting back on essentials.



Fixing the debt trap

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

A third of parents (32%) in problem debt said that councils were not helpful at all when they sought help with debts, and 42% of parents in problem debt said payday lenders treated them ‘badly’ or ‘very badly’.

The report calls on every council to create a debt collection strategy which takes into account the impact on families with children.

Regulators should make sure that creditors have ‘early warning systems’ in place, so they know when their customers are facing financial difficulties and offer advice and support. Earlier and wider access to debt support and advice could help families put the brakes on a downward cycle of debt and reduce the impact on children.

The report’s authors say that children should be learning about borrowing from their schools and families, rather than from advertising by lenders. The charities call for tighter restrictions on advertising to children, as well as piloting savings accounts for children through credit unions.


 The Debt Trap Report

 The Debt Trap Theological Reflection


The reports coincides with The Children’s Society’s launch of ‘The Debt Trap’ – a campaign lifting the lid on the massive impact of debt on children’s lives.
Findings are based on a representative survey of 2,000 UK families commissioned by The Children’s Society, a survey of 4,400 British adults by YouGov and 15 in-depth interviews with families with problem debt.