One out of every 62 families in Milton Keynes is having their home repossessed because they cannot pay their rent or mortgage.
Meanwhile 6,000 more city families are in debt, owing an average of £4,468 apiece.
This means more than 10,500 children in MK are officially living in poverty.
The shock statistics were revealed this week in two separate reports, one from the Children’s Society and the other from homelessness charity Shelter.
Children’s Society, head Matthew Reed, said: “Families are increasingly relying on debt as a way to make ends meet – but we’re in danger of ignoring the impact this is having on children now and in the future.
“We cannot allow children to pay the price of debt.”
Shelter chief executive Campbell Robb blames sky- high housing costs for pushing families over the brink.
“With finances stretched to bursting point just one thing, such as an illness or job loss, can be all it takes to leave a family facing losing their home,” he said.
Milton Keynes, with 1,252 repossessions going through court in the past year, has been named as a regional hotspot.
Said Mr Robb: “Tragically we are seeing more and more people coming to us for help.They face seeing their home, the foundation of their life, ripped away from underneath them.”
Since 2011 the charity has seen the number of people seeking its help for rent arrears more than double. while mortgage arrear callers have increased by one fifth.
Studies show family debt can cause children to suffer from anxiety and be more likely to become victims of bullying.
MK prospective parliamentary candidate Andrew Pakes said the new statistics should be a “wake-up call” for authorities to take action.
He said: “Despite the economy beginning to get back on track, many families in MK are still struggling to make ends meet.
“It is not good enough for the government to brag about the recovery when the benefits of growth are not yet being shared evenly.”