Published: 19 May 2014
A report from The Children's Society and Charity StepChange has highlighted that problem debt is putting a huge amount of strain on families and children, trapping them in an endless spiral of borrowing and leaving them in financial hardship.
The report shows that more than two and half million children are living in families that are behind on loan repayments and household bills, leaving them with combined debts of just under five billion pounds. There are also five million children who are in families that are only just keeping their heads above water and risk falling behind on repayments in the future.
The report also looks at the affect debt can have on children, with nine out of ten families struggling with debt claiming that they have had to reduce spending on essential items like clothing, heating bills and even food so they can keep up with their repayments.
Many parents in this situation don't have any other option but to borrow money in order to survive, with the report highlighting that a third of families with debt have had to take on credit in the last 12 months to feed and clothe their children. This leads to families being trapped in debt as loan repayments eat into their household income, forcing them to borrow even more to pay for essential items - leaving them in a vicious circle of borrowing and incurring more debt.
Many family and children's charities have issued a rallying cry to the government to change the way that creditors handle families with children who fall behind on repayments. They have asked the government to review the protection of children who are harmed by bailiffs, evictions and other debt collection methods by creating a new 'breathing space' scheme - which would allow families an extended period of protection from additional interest, charges and enforcement action.
The report also surveyed some of the struggling parents themselves, with 32% of them saying that they didn't get any help from local councils when enquiring about help with their debt and 42% of them expressed that they were treated 'very badly' from payday lenders. The report urged local councils up and down the country to implement a new strategy for the collection of debt from families with children.
The report concluded with the authors of the study calling for parents and schools to do more to educate children on money management and borrowing and for tighter restrictions to be put in place on lenders advertising to children, as well as more savings schemes through credit unions for children.
Following the report, The Children's Society have launched a new campaign aimed at ending the damage that debt can cause to children called 'The Debt Trap'.
Our team at K J Smith Solicitors have many years in dealing with family breakdowns and all issues relating to family law. To arrange a free consultation to see how we can help, contact us today on 01491 630000 (Henley on Thames), 0118 418 1000 (Reading), 01753 325000 (Windsor), or 020 7070 0330 (Central London).