Characteristics of households in debt and the nature of indebtedness

Authors: Professor Elaine Kempson, Stephen McKay, Maxine Willitts
Funded by: Department for Work and Pensions
Published by: Corporate Document Services
Publication date: June 2004
Report number: DWP Research Report No 211
ISBN: 1841236934  

The rather emotive term 'debt' is used to describe two quite different situations. First, it is frequently used to refer to use of credit, and having outstanding money to repay. So someone is said to be 'in debt' if they, say, have a personal loan from a bank, owe money on a credit card, or have bought goods on hire purchase or through a mail order catalogue. At the same time, debt is also used to refer to financial difficulties and people are said to be 'in debt' if they have fallen behind with the payments on any of their household bills or other commitments. Sometimes the term 'problem debt' is used for this.

The overall aim of this study was to examine the nature and extent of debt in families compared with other groups, and to pull out any changes over time. The focus was especially on low-income groups and debt in this context is taken to mean financial difficulties, and arrears more specifically, and not consumer credit borrowing per se.

The study comprised a literature review and secondary analysis of data, including both cross-sectional and longitudinal analysis. The main datasets analysed were the Families and Children Study; the Poverty and Social Exclusion Survey carried out in 1999; the Department of Trade and Industry Over-indebtedness survey, undertaken in 2002; and the British Household Panel Survey.

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