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The Debt Trap: The impact of debt on families with children

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Update 27 November, 2014:

As a result of our work with the Children’s Society, the Government has recognised the devastating impact being exposed at an early age to the advertising of high-risk credit can have on children. It has asked the Broadcast Committee of Advertising Practice (BCAP) to broaden the remit of its review of payday loans advertising to include the appropriateness of scheduling as well as content.

It is crucial that those interested in ensuring children are protected from the damaging effects of advertising emphasise to BCAP during the review period the importance of this issue. We welcome the input of partners in making the case to BCAP and would be keen to discuss the issue further with any interested parties. For further information please contact Joseph Surtees, Senior Public Policy Advocate at 0207 391 4582 or via email

We cannot allow children to pay the price of debt

Despite millions of children living in families with problem debt, very little research has explored the impact it has on them. Our report, written alongside The Children's Society, lifts the lid on the devastating impact debt can have on children.

Combining a survey of 2,000 families with children, and in depth interviews with 14 families in problem debt the report reveals:

  • 2.4 million children live in families with problem debt
  • Families with children are behind with payments of £4.8billion 
  • A further 2.9 million families with dependent children are struggling to keep up

6 out of 10 children in struggling households worry about having enough money

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. 

10 per cent have used credit to pay for food

Why are people falling into these "debt traps"?

Families often find themselves in situations where they have little alternative but to turn to credit to pay for necessities. The report reveals:

  • 10% of families said they had taken out credit to pay for food for their children
  • 18% had used credit to pay for clothing
  • 5% had used credit for heating

Fixing the debt trap

The government should consider developing a ‘breathing space’ scheme to give struggling families an extended period of protection from additional charges, further interest and enforcement action.

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

And 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.

There needs to be tighter restrictions on advertising to children, as well as piloting savings account for children through credit unions.

Children should be learning about borrowing from their schools and families, rather than from advertising by creditors."

Actor Brian Cox on child poverty

Brian Cox talks about the painful effects of debt and poverty on his family.


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Join the campaign

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We're supporting the Children's Society campaign to protect children from the impact of debt.

Find out how you can support the campaign by visiting their Debt Trap mini-site.

Contact our policy team

Read the report

Find out about the impact debt has on families with children.

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Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.

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