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Posted: 26 August 2014

Stopping the debt trap

You are a mum or dad in a low-income family with small children. You don’t have much money, just enough to get by. Then one day the boiler breaks down and you have no heating, no hot water and absolutely no means of getting it fixed. You see an advert for a payday loan, which would mean you could call out a plumber, get the boiler fixed and keep your children safe and warm. What would you do?

'That’s how it happens,' says Lily Caprani, Director of Strategy and Policy at The Children’s Society. 'We’ve found families that can’t give their children the essentials without borrowing. Often they can’t afford the repayments and take out more loans to pay some of it back, and they become trapped. That’s why we call it The Debt Trap.'

A vicious cycle

With our new Debt Trap programme, we are looking at how problem debt is driving families into poverty. Over the next few months, we’ll be increasing the ways we help those in debt, as well as campaigning to prevent others from becoming trapped in a cycle of poverty and debt.

This cycle is all too familiar to single mum Latasha, 22, who lives in the West Midlands with her children: Layla, four, Darrall, three, and Tia, two. Latasha’s financial difficulties began when she was housed in a flat that had a damp problem and she took out a small loan to pay for redecoration. But the damp kept coming back and Latasha soon found herself in a vicious cycle: as well as paying to repair the damage, she had to buy new clothes for the children to replace those spoiled by mould – all paid for by loans.

‘I thought I was going to pay the loans back when I got paid, but I always needed the money for something else,’ says Latasha. ‘You have no control over it. You don’t realise how much debt you get into until you look back, then you go,“How am I going to pay that back?”’

A downward spiral

The situation started taking its toll on Latasha. She explains: ‘I was badly depressed, with anxiety and panic attacks. For two years I didn’t like to leave the house, I felt isolated and my daughter missed time from nursery. It was stressful not knowing how to deal with the debt, and feeling it was my fault.’

Fortunately, Latasha was referred by her daughter’s school to one of our children’s centres in Solihull, and through them she received support from debt advice experts. On a fixed income of less than £300 per week and with three growing children, getting back in the black was never going to be easy. But over the past couple of years Latasha has reduced her debts to just under £2000, and with the charity’s help, she is confident she will pay off the rest.

Looking to the future

‘Now I’m happier, it’s rubbed off on my children,’ says Latasha. ‘I recently had some good news about a new house and they were all jumping around! Layla’s the most excited. She’s
older so she understands more when things are good, and when they’re not.’

The effect debt has on children forms a large part of our current work. Our report The Debt Trap: Exposing The Impact Of Problem Debt On Children reveals the negative effects financial problems can have on young families.

Things are looking up for Latasha. She volunteers at her local children’s centre and, with our support, is training to become a social worker.

‘It takes one unexpected crisis to land a family in debt,’ says Lily Caprani. ‘We want to prevent families from, getting into debt by campaigning for alternatives to high-interest loans, and by getting the right help and advice out there. We need to stop families being caught in The Debt Trap.’

You can help

Could you pledge your support to help families like Latasha’s? The Debt Trap campaign is just one of the ways in which we are tackling child poverty.

Read our report and get behind our campaign to deal with debt in the UK.

By Emma Barlow - Guest bloggers