An IVA is a legally binding contract between you and your creditors that stops further demands for payment and legal actions. Monthly payments are deteIn 2023, the financial struggles faced by single parents have become more pronounced as living costs surge, accompanied by stagnant wages. Single-parent families, dealing with the unique financial burdens of running a household on a sole income, often resort to credit cards and loans to make ends meet. This article delves into the evolving financial landscape for single-parent households in the United Kingdom.
Understanding Single-Parent Debt
Single parents, juggling household responsibilities with one income, find themselves in a precarious financial situation. The cost of childcare, which is already prohibitive, adds to their financial burden. The COVID-19 pandemic further exacerbated the difficulties faced by single-parent families, pushing many into dire financial straits. Gingerbread, a debt charity, reports that “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.” Even without the pandemic, 82% of single parents admit to borrowing money due to insufficient income, plunging them into debt.
Available Financial Assistance for Single Parents in Debt
Single parents often struggle with low incomes due to the challenges of finding work that accommodates childcare needs or allows for flexibility in case of emergencies. Welfare changes in recent years have made their lives even more challenging.
The reduction in benefit income has hit families across the UK hard. Essential household expenses such as rent or mortgage payments, utilities, council tax, and water bills still need to be covered. Childcare costs, a significant burden, add to their financial woes. Beyond necessities, discretionary spending on leisure activities is a distant luxury.
Single parents working on low incomes may be entitled to certain benefits, including Universal Credit, Housing Benefit, Council Tax Benefit, and assistance with mortgage interest. The Single Parent Action Network and the government’s .gov.uk website offer resources to help single parents explore available benefits through benefits calculators.
Rising Problem Debt for Single Parents
For single parents, problem debt is not just a financial issue; it’s a crisis that impacts their ability to provide even basic necessities for their families and takes a toll on their mental health. A study conducted by StepChange in collaboration with Gingerbread found alarming statistics:
- 50% of single parents had to cut back or go without food/meals for themselves, and/or had to cut back or go without heating or electricity (51% single mothers, 46% single fathers).
- 20% of single parents are now using credit to pay for household essentials and a similar proportion has started using food banks
- 49% of indebted single parents reported mental health struggles, with 54% experiencing sleeping troubles
The core issue for single parents trapped in problem debt is the challenge of increasing household income sufficiently to meet debt repayments. Without family support, childcare costs rise, making it harder to stay current on payments.
This is the start of a daunting “debt spiral” for single parents. Inability to cover expenses without borrowing, inability to make repayments without working more, and inability to work more without increased childcare costs all lead to defaults on payments. Falling behind on council tax, rent or mortgage arrears, utility bills, and other essential costs can lead to severe problem debt and even encounters with debt collectors or bailiffs.
Seeking Debt Advice for Single Parents
As with any debt crisis, seeking debt advice and assistance promptly is essential. Single parents have enough on their plate without the added stress of overwhelming debt. Contacting a debt charity such as StepChange, or Gingerbread is a crucial first step. These organizations can assess your financial situation, provide advice regarding your creditors, and inform you about available benefits and grants. They can also guide you on whether a debt solution is a viable option.
Debt Solutions for Single Parents in 2023
For single parents who find it challenging to repay their debts within a reasonable timeframe and face actions like debt collection or county court judgments (CCJs), debt solutions can provide a path to recovery.
Debt Management Plans (DMPs) or Individual Voluntary Arrangements (IVAs) are suitable options for those who can manage regular payments but need help consolidating their debts. If repayments seem impossible, a Debt Relief Order (DRO) might be a better fit. A DRO is an alternative to bankruptcy for non-homeowners with limited assets, and little disposable income. It freezes interest and charges, and if your circumstances remain unchanged during the 12-month DRO period, your debt is written off with only an administration fee of £90 to pay.
An IVA is a legally binding document between you and your creditors that stops further demands for payment and legal actions. Monthly payments are determined based on your financial capacity and continue for a specified term, typically five to six years. At the end of the IVA term, the remaining debt is written off.
A Debt Management plan is not a legally binding arrangement and allows you to repay your creditors at an affordable level, until the debt is repaid in full. There is no debt write off.
For single parents trapped in insurmountable debt, an IVA can offer a lifeline to financial stability. Whether you’re a single mother, father, or guardian, contact Debt Movement today for impartial guidance on available debt solutions.
There’s no need to struggle unnecessarily with the weight of money worries. Seek help and take the first step towards a brighter financial future.
At Debt Movement we provide professional debt guidance and solutions that help you move out of debt. We offer non-judgemental financial guidance to relieve the burden of financial strain and offer support on your journey to financial freedom. Request a free call back today.
