Credit: COFI/POWER-PAC Illinois

A new report conducted by Parents Organized to Win, Educate and Renew-Policy Action Council (POWER-PAC Illinois) focuses on the kinds of debt crippling parents face in very low-income communities in Chicago and elsewhere in Illinois. The report, called “Stopping the Debt Spiral,” is based on surveys conducted by POWER-PAC members—themselves mostly low-income women of color—throughout 2016, and includes policy recommendations and information on campaigns already in the works to resolve some of the inequities discovered in the surveys.

Nearly 80 percent of 304 people surveyed were women. Nearly 60 percent said they lived on a household income of less than $15,000 per year, and two-thirds said they had no savings. Most respondents were between the ages of 31 and 60; half were single, 53 percent were black, and 37 percent were Latino. Almost 60 percent were Chicagoans, but POWER-PAC also surveyed parents in East Saint Louis, Elgin, and other communities. Most respondents felt trapped by credit card debt, car payments, and student loans, but those with the lowest incomes were also significantly burdened by past-due utility bills and city tickets.

Rosazlia Grillier a POWER-PAC member for more than ten years, says it was important that the survey was conducted by people who were themselves familiar with the problems it was trying to quantify. “Families that we work with and are part of our organization were being negatively impacted the most,” she says. “We hosted a number of forums where we went through the actual survey with folks. We also took it to the street, we knocked on doors in our own community to build those relationships, so [respondents] could feel comfortable with giving honest answers.” POWER-PAC emerged out of Community Organizing and Family Issues (COFI), a nonprofit that trains low-income parents for civic and political participation and community organizing.

Since most respondents earned less than $15,000 per year, the report compared the sorts of debt that affect their households to that of more affluent families. The households making less than $15,000 cited debt from past-due utility bills, tickets, and payday loans more frequently than higher-income households. Meanwhile, those making more than $15,000 more frequently cited debt from student loans, hospital bills, car payments, credit cards, and mortgages.

Three-quarters of the respondents making below $15,000 said they felt like they couldn’t stay ahead of their debt. The report notes that “for many families, the consequences of debt are even more overwhelming than the debt itself. Indebtedness thwarts employment, education, finding decent housing, business creation and other economic advancement opportunities.”

Types of debt reported by respondents making less than $15,000 per year, and those making more
Types of debt reported by respondents making less than $15,000 per year, and those making moreCredit: COFI/POWER-PAC Illinois

Several respondents were profiled in the report, and their testimonials captured how debt intertwines with inferior services that put their families’ health and finances at risk. For example, Miriam Hernandez of Elgin recounted how she incurred hundreds of dollars in medical debt at an Elgin hospital when her four-year-old daughter lost the ability to walk due to a spinal cord malformation. Doctors in Elgin didn’t seem to take the condition seriously and the family was eventually referred to a specialist in Chicago; by then her daughter was at risk for permanent disability. Though the treatment was ultimately successful and the girl was able to walk again, the family lost money in travel costs to Chicago for adequate health care, and they lost income from days off work, exacerbated by the medical debt they’d already accumulated.

Grillier says the surveyors were particularly surprised to learn that unpaid traffic tickets and other city fines have prevented people from getting jobs with the city. “We’re trying to help parents remember that there’s a leader in them, to be engaged win their children’s school and be engaged in their communities,” she says of POWER-PAC’s work. “We started to see that even for parents to volunteer in school, there was a challenge. And then if the school wanted to employ them [city debt] became a barrier to them even to work win their own children’s school. That took us aback.”

They also found that people with city debt are barred from getting city licenses for working as barbers and beauticians. “Thus, city policy—which lacks accessible repayment plans—limits access to employment necessary for families to catch up,” the report notes. In addition, debt such as unpaid parking tickets can lead to driver’s license suspensions, which further limit people’s ability to make money to pay off the debt.

“My driver’s licence was actually suspended and I had no idea,” Grillier says. “I had paid a ticket and they held on to the check until they couldn’t submit the check. I had no idea they had never recouped the funds. I was pulled over for a taillight or something, and it was a nightmare to even navigate the system to get [the license reinstated]. It was two years until I got full completion of that situation.” A recent investigation by ProPublica found that city tickets are the major driver behind bankruptcy filings in Chicago.

Since concluding the surveys, POWER-PAC has been pushing for legislative reforms that can alleviate predatory business practices and the collateral costs of being in debt. Policy recommendations are outlined throughout the report, and include expanding charity medical care in Illinois hospitals, limiting driver’s license suspensions for nonmoving violations, prohibiting the use of credit reports in hiring, and creating subsidies that would would adjust households’ utility costs according to income.