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    Debt weighs heavily on those trying to rise from poverty

    Tasha Jean-Felix, a mother of two in Everett, was in debt after getting sick and losing her job. She has repaid what she owed but hasn’t yet found a full-time job.
    Joanne Rathe/Globe Staff
    Tasha Jean-Felix, a mother of two in Everett, was in debt after getting sick and losing her job. She has repaid what she owed but hasn’t yet found a full-time job.

    Roberta Brown, a 37-year-old single mother, lives in a homeless shelter, desperately trying to find the job that will help her gain a new home and better life. She recently earned a certificate as medical assistant, hopeful it would lead to a job in the state’s burgeoning health care industry.

    But that has not been not enough to surmount what Brown believes are the greatest barriers to her employment: the $20,000 in credit card debt she ran up while out of work several years ago and her damaged credit report. Each time she applies at a hospital, she’s asked to sign an agreement allowing the employer to check her credit.

    “It’s really hard,” she said, “when you feel like they’re just looking at your credit.”

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    Brown’s experience is just one example of how debt makes it even harder for low-income families and individuals to break the cycle of poverty — even as they take steps, such as gaining new skills and higher levels of education, that are supposed to help, according to a new study by Crittenton Women’s Union, a Boston nonprofit that helps people find ways out of poverty.

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    The study, based on a survey of more than 100 low-income individuals, found that most of the debts resulted from stretches of unemployment, medical costs, and student loans. The study also found that poor people are often overwhelmed by high interest rates that make it nearly impossible to pay down debts, then penalized again when prospective employers or landlords conduct credit checks before hiring or renting to them.

    “It’s so discouraging,” Ruthie Liberman, vice president of public policy at Crittenton. “We brought their education level up and brought their income up, and they’re still trapped.”

    The report said a growing number of employers use credit reports to help vet a potential employee, and cited research that nearly 50 percent of Massachusetts residents have subprime credit scores.

    It’s impossible to know for sure if companies disqualify candidates based on credit scores, since most people aren’t told the reasons they done get a job, said Liberman. But the concerns are great enough that state Senator Jamie Eldridge, Democrat of Acton, said he is drafting a legislation that would limit the use of credit scores in hiring.

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    As co-chairman of the Senate’s Asset Development Commission, he said he heard many people testify that they borrowed money for college or a trade certificate, but could not find work. When their student loans came due and they were unable to pay, their credit rating suffered -- and so have their job prospects.

    The debt “left many, often single mothers, in a worse position than when they started,” he said.

    More than 20 agencies, including the Federal Reserve Bank of Boston, Financial Planning Association of Massachusetts, National Consumer Law Center, shaped the survey questionnaire, which was administered by nine social service programs throughout Greater Boston. The average income of those who responded was $19,380 a year. About 70 percent were women, and about 30 percent had a college degree.

    Tasha Jean-Felix of Everett, a mother of two, was a paralegal earning $35,000 a year, until she got sick unexpectedly, couldn’t work, lost her health care, and racked up about $3,000 in debt. Felix, who works 10 hours a week, has repaid her medical debt, slowly, with help from a hospital repayment plan, but still hasn’t found a full-time job.

    Ana Patricia Munoz, a researcher at the Federal Reserve Bank of Boston, said lower income people often live close to edge, without the savings or other assets that might help them in an emergency. Many turn to payday loans or pawn shops, where they face high interest rates and other penalties that only compound their financial problems.

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    “Those barriers are very hard to surmount,” she said. “These are people with no assets and lots of debt.”

    Maya Abdul-Malik fell into debt as a student at Bridgewater State University, paying for most of her expenses, from tuition to books to used car, using a credit card and student loans. When she unexpectedly got pregnant in 2006 and had to pay her medical bills, she couldn’t make her payments on the $22,000 debt she had accumulated before she dropped out.

    “That was the beginning of the credit nightmare,” said Abdul-Malik, of Cambridge.

    Abdul-Malik paid 26 percent interest on some of her credit card debt, and one of her school loans doubled to $15,000 because of interest and accumulated penalties and fees. It was a struggle, she said, to pay the bills and raise her disabled daughter. She ended up on welfare, living in subsidized housing. But she returned to school, sought help from Crittenton, and eventually graduated from Bunker Hill Community College.

    In 2012, she declared bankruptcy, opting for a fresh start. She said she is rebuilding her credit and is pursuing her bachelor’s degree, paying for it with grants and scholarships. Her goal? To open a savings account for her and her daughter.

    But first, she said, she must land a job.

    Maya Abdul-Malik paid 26 percent interest on some of her credit card debt, and a school loan doubled to $15,000 because of interest and accumulated penalties and fees.
    Joanne Rathe/Globe Staff
    Maya Abdul-Malik paid 26 percent interest on some of her credit card debt, and a school loan doubled to $15,000 because of interest and accumulated penalties and fees.

    Megan Woolhouse can be reached at megan.woolhouse@globe.com. Follow her on Twitter @megwoolhouse.