single parent debt

Single Parent in Debt — a Hidden Problem

For many years, people have been living with the trauma of money worries before they start to explore their options or seek help. Especially for single-parent families, these concerns are very real because they have high household and living costs from running a family home. With rising living costs and pay freezes, disposable income is being squeezed more than ever for single-parent families to cover basic living costs. This article covers single parent in debt.

Since single parents only have one source of income, they often resort to credit cards and other means of finance to make ends meet. Childcare costs (already expensive) is another factor that contributes to the problem. In 2020, when the COVID-19 global pandemic hit, single-parent families were forced into difficult situations.

Debt charity Gingerbread states: “Since the beginning of the COVID-19 crisis, single parents have found themselves disproportionately impacted by nationwide measures to limit the spread of the virus.” But, even without the devastation of the global pandemic, “82% of single parents said not having enough income to meet living costs meant they were forced to borrow money and ended up in debt.”

As a single parent, what financial assistance is available if I am in debt?

Since many employers are not willing to adjust hours or provide paid leave, single parents usually have to take lower-paying jobs and therefore have lower incomes. The reasons for this struggle are mostly due to childcare or the need for time flexibility; if they can’t get those things, then they aren’t able to work as much. Understandably, this starts a cycle of poverty that is hard to break out of. Single parents have always been disadvantaged in our society, and recent changes in welfare programs haven’t helped them at all.

The decrease in benefits income impacted families across the UK. More parents are now struggling with money, which is especially difficult for single-parent households. Even though benefits have been gradually decreasing over the years, essential bills like rent/mortgage, utilities and council tax still need to be paid. Not only is childcare a struggles for single parents, but it’s also an expensive one. This cost doesn’t even include other expenses that may be considered optional, like going out for leisure activities.

Working extra hours to make more money can end up being counterproductive when childcare costs are factored in. Parents who earn a low income may be entitled to certain benefits, including Universal Credit, which helps supplement a lower wage/salary. There are also other potential benefits such as Housing Benefit and Council Tax Benefit, as well as help with paying mortgage interest.

Problem Debt for Single Parents on the Rise

Debt is more than just a financial burden for single-parent families, many are struggling to even feed their families and it’s beginning to take a toll on their mental health. A recent study coordinated by Stepchange in conjunction with Gingerbread found that of all single-parent families that took part in the study:

  • 51% had fallen behind on making rent or mortgage payments as a result of making debt repayments.
  • 19% of single parents had to use food banks as a result of making debt repayments.
  • 69% of single parents who were in debt reported struggling with their mental health, and 68% of indebted single parents suffered from depression specifically.

A single parent’s problem when it comes to debt is often increasing the household income. This way, they can afford monthly debt repayments. Unfortunately, childcare costs significantly increase for those who don’t have family members to help out, making it more difficult maintain payments each month.

This is how the “debt spiral” begins for single parents: being unable to afford things without borrowing, being unable to make repayments without working more, and then not being able to work more because of increasing childcare costs. All of these factors can lead to defaults on council tax, mortgage or rent payments, utility bills and other household expenses—and further down the line, debt collectors or bailiffs.

Being aware of your rights and the assistive measures that exist benefits you greatly. All creditors, collection agencies and bailiffs are required to adhere to specific rules.

Where to Get Debt Advice for Single Parents

The best thing you can do when first encountering debt is to seek professional advice and guidance. Remember that no situation is ever hopeless, and there are always people willing to help out. For example, several charities offer support specifically geared towards single parents who might be struggling with debt-related stressors on top of everything else they have going on in their lives.

Debt Solutions Available

If your debt has gotten to the point that you would not be able to pay back the money owed within what is considered a reasonable amount of time — and your creditors have begun proceedings such as collection agents, bailiffs or county court judgements (CCJs) — it is probably time to consider a debt solution that can help you get back on track.

If you’re a single parent, there are various debt solutions available to you. If you’re confident in your ability to regularly make payments but just need help consolidating your debts, consider a Debt Management Plan (DMP) or Individual Voluntary Arrangement (IVA). However, if repaying what you owe seems impossible and many other single parents find themselves in the same situation, then a solution like a Debt Relief Order (DRO) may be better for you.

A DRO is a debt solution for those who have no assets or monthly disposable income to use toward paying back their debt. It is an alternative to bankruptcy for non-homeowners with less than £2,000 in assets, creditors of less than £30,000 and a disposable income of less than £75. A DRO will freeze all interest and charges being added to your debt, and as long as your circumstances haven’t changed in the 12 months that you are in a DRO, the debt is written off at the end.

An IVA is a safe, legally binding contract between you and your creditors that cease all current or future actions against you as long as monthly payments are met. Your IVA provider will fairly calculate monthly payments based on what you can reasonably afford; these terms usually last five to six years. Upon completion of the final payment, you will receive a certificate of completion and any leftover debt owed will be completely written off.

An IVA is a great option for single parents who have gotten themselves into debt and can’t seem to find a way out. If you’re a mum, dad, or guardian looking for help getting rid of your debt so that you can be financially free, contact Become Debt Free today on 0800 169 1536 or leave an enquiry for some guidance about the different options available to you.

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Customers can get free debt advice from the Money Advice Service – an organisation set up by the Government to offer free and impartial advice to those in debt. For more information from the Money Advice Service visit MAS is part of the Money & Pensions Service. We are not affiliated with MAS in any way.

Become Debt Free is a trading style of Re10 (Finance) Limited Registered Number 04651137.  Data Protection Act Registration Number – Z8613095

Become Debt Free specialise in providing and administering Individual Voluntary Arrangement (“IVA”) solutions to individuals based in England, Wales and Northern Ireland.  We do not administer Debt Management Plans, Debt Relief Orders, or any other debt solutions.  We only provide advice after completing or receiving an initial fact find where the individual(s) concerned meets the criteria for an IVA, therefore, all advice is given in reasonable contemplation of an insolvency appointment.

* To qualify for debt write off in an IVA with us, you must have a minimum of £7,000 of qualifying unsecured debt owed to two or more creditors.  The amount of debt write off is based on your own personal circumstances – typically this could be up to 85% of what you owe; and this has been achieved by over 10% of our customers who have successfully completed their IVA’s in the last 12 months.  The amount of debt write off differs for each customer and is dependent upon their individual financial circumstances and subject to the approval of their creditors.

Andrew Bowers is authorised in the UK to act as Insolvency Practitioner by the Insolvency Practitioners Association.


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