Dear kiddo, a sponging-house is a place where people who are in debt go to stay until they can pay off what they owe. It's like a temporary home for them.
Let's say your mom wants to buy a new toy for you, but she doesn't have enough money to pay for it. So, she borrows money from the toy shop to buy it and promises to pay it back later. But, if she can't pay it back on time, she'll have to go to a sponging-house until she can pay off the debt.
In the sponging-house, your mom will have a place to stay and food to eat, but she won't be able to leave until she has paid back the money she owes. They might also ask your mom to work for them to earn money to pay off the debt.
Overall, a sponging-house is a place for people who are in financial trouble to stay until they can pay off their debts. It's like a mini-jail, but with nicer surroundings and kindness towards people who are struggling.