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
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.
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."
Download the report now to see our full research and recommendations.