By Professor Adele Atkinson, Professor of Practice in Financial Literacy and Wellbeing (CHASM)
Department of Social Policy, Sociology and Criminology, University of Birmingham
Each year, Debt Awareness Week promoted by the national debt charity StepChange, aims to increase awareness of debt and the advice and solutions available to help. This year, the focus is on shame and stigma, challenging attitudes to debt and helping people access the support they need.
The Centre on Household Assets and Savings Management (CHASM) and the Financial Inclusion Commission recently undertook research with people with lived experience of financial exclusion and stakeholders with an interest in increasing financial inclusion across the UK. Their research, Achieving Full Financial Inclusion in the UK: Current Realities and Potential Solutions, shone a spotlight on debt problems and illuminated potential solutions.
Adele Atkinson, Professor of Practice in Financial Literacy and Wellbeing, explores stigma and the impact that debt can have.
“Debt hits people hard, creating feelings of shame and guilt as well as financial worries. When people are unable to pay what is due, the pressure mounts, and they face impossible choices. Yet many people told us that greater flexibility could have prevented their difficulties and alleviated many of the problems that they faced.”
Starting Conversations About Debt
Breaking the silence around debt is crucial. Many people delay seeking support due to fear, shame, or simply not knowing where to turn.
“When people seek help for debt problems, they are typically already emotionally drained and overwhelmed by the impossible trade-offs needed to meet their essential needs. By the time they seek help, they are extremely vulnerable to harm caused by insensitive or poorly designed communications. Providers could work with those with lived experience to develop communications that are respectful, clear, and concise.”
Encouraging open conversations with partners, friends, and family can reduce feelings of isolation and provide pathways to support.
The First Steps to Getting Help
Understanding what practical steps can be taken to manage debt is key. People told us they would be better able to manage their money if:
- They could choose the date for direct debit payments.
- Greater flexibility was built into repayment schedules.
- Creditors responded to concerns about difficulties in paying before borrowers fell behind.
“More understanding from creditors about the emotional implications of being in debt and seeking help could significantly improve outcomes.”
A Thought Experiment: The Impact of Debt
Imagine all we need in life is a daily plate of food, and let’s assume that these plates are delivered to us weekly. What happens if, one day, we drop a plate of food?
If it’s early in the week, we could eat the next day’s dinner and keep doing that until the end of the week. But on the last day, there will be no more dinners, and we will have to wait until the next delivery. Our hunger will have been pushed into the future, but it will catch up with us eventually.
We could ask a neighbour to lend us one of their dinners, promising to give them one back when we get our next delivery. But then, we will be short of dinners again as soon as our delivery arrives. And if that neighbour asks for a little extra food in repayment, our problem grows.
What if, instead of asking a neighbour for help, we re-apportion the remaining food over the next few days? This would mean struggling a little for several days but at least we have something to eat each day. After a few days, we will be back to full-size meals. Sometimes, tightening our belts is a viable option. However, if the meals are already so meagre that there is nothing to spare, this strategy is not going to work.
Now, imagine that once every six weeks, the food delivery includes a bonus meal. Then we could plan ahead and make sure that we use that bonus meal to replace the one we lost. Of course, if we had been better prepared, we might have put the last bonus meal in our freezer! But even without that forward planning, we can see the light at the end of the tunnel and get back on track without suffering from hunger.
But what if we were carrying a whole family’s meals and dropped them all, or we weren’t in one day to receive the delivery and had to manage a week without food? What if the extra food that the neighbour asks for in compensation leaves us unable to eat for a week or more?
Conclusion
The problem with debt is that however it starts, it can remain a problem for a long time, particularly for people operating a tight budget. Most apparent ‘fixes’ (such as borrowing from someone else to repay another debt) are only temporary, pushing the problem into the future. If cutting back on expenditure isn’t an option, then it is unlikely that someone will become debt-free without additional income or external support. By increasing awareness of the signs of financial difficulty across society (though initiatives like Debt Awareness Week), improving flexible approaches to repayments and debt recovery, and fostering empathy for the overindebted amongst creditors, we can help individuals navigate financial difficulties with dignity and respect.
- Resources and advice around debt are available from Step Change
- Read more about CHASM and their research
- Find out more about Professor Adele Atkinson
- Back to Social Sciences Birmingham
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.