Problems with debt

Many people are susceptible to debt but people with mental health problems can have specific problems with money related to their illness.
There are many reasons for someone to get into debt, from credit cards and store cards to mail-order catalogues; from hire purchase to mortgages. Access to credit is very easy.

Sometimes people have started work and then it ends suddenly because of mental illness and are left with changes in income that make it more difficult for them to budget and manage their income. Some people living on State Benefits with a low income with no savings have no money to cover one off costs. Many people with severe mental illness do not qualify for free prescriptions and have to find the cost of them.

Often because of mental illness people simply do not claim benefits that they are entitled to. At the extreme end people with mania are known to increase spending when they are ‘high’ and spend money that they do not have.

All these problems give rise to an increasing amount of stress on both the person in debt and those involved in their care. This article gives a few suggestions for dealing with existing debt and trying to ensure that it does not mount up again.

For information about debt and lending, for service users and support workers, please see the Mental Health & Debt [www] website.

What help can I get?

If you, or someone you know, is getting into debt, seek help as early as possible. There are several services that should be able to offer advice and may help you draw up a debt management plan.

Free debt advice can be obtained from the Citizens Advice, local advice services which can be found in the yellow pages, National Debtline, or advocacy services.
Solicitors, debt agents and credit repair agencies also give advice on debt management but you have to pay for their services. Not all these services will understand the link between mental illness and debt.

If you feel that mental illness has had an influence on you getting into debt, contact Rethink National Advice Service.


What sort of help will I get?
The advisor will look at all the debts you have and decide which are priority and which are non-priority.

Priority debts are those which if unpaid will lead to criminal prosecution or eviction. This includes, but is not necessarily limited to;

  • Unpaid fines
  • Council tax
  • Rent or taxes.

Non-priority debts are all the remaining debts which will not lead to such serious consequences as the priority debts. It is important to note that failure to pay non-priority debts can still lead to a summons in the County Court which may affect your credit rating and reduce your borrowing capacity in the future. They will help you draw up a financial statement that sets out your spending and income, and shows what money is available for repaying debt.

The advisor will try to maximise your income by making sure you are claiming all the benefits you are entitled to and by ensuring you are only being charged for debts which you are responsible for. The advisor will help to devise a repayment plan paying what they feel you can afford to pay, or they will offer you alternative plans.

The advisor may also help you fill in forms, write letters, negotiate with creditors and in some cases attend court hearings or benefits tribunals with you. Most specialist agencies will assist with housing problems relating to rent arrears and housing repossession.

What can I do?

Man using telephone
Try not to panic. It is important to keep bills and letters relating to your debt safely and give them to the advisor.

When you speak to the advisor, be honest about how much debt there is, they are not there to judge you, just to help. Be realistic about your spending habits and recognise what is an essential item, smoking might be considered a luxury but for a person with a mental health problem it can be an essential item. Co-operate with the debt worker as much as possible. They are there to help.

A letter from the doctor confirming a health problem can help with debts being reduced or written off. Sometimes admitting to a mental illness may affect future insurance claims or make it more difficult to get insurance. This is because many policies exclude people with a recurring illness. The advisor will need to check whether the Disability Discrimination Act applies particularly its effect on insurance.

What if it goes to court?

If you have not paid what you owe or cannot keep up repayments you may be taken to court. It is important that you contact someone who can help you with this. Suggestions of who to contact include the Citizens Advice , debt advice services or the National Advice Service at Rethink. All of these have access to specialist advice and will be able to help you.

The court is not there to judge anyone guilty or innocent, but to settle disputes about money owed, and how to repay it. Sometimes you may not even have to attend court but it is important that you fill out the forms fully. Some forms have a deadline for completing them. If you are having difficulty doing this take them to one of the advice services mentioned.
The money that you owe may be deducted from you wages if you work or from your benefits if you are receiving these. This cannot happen for Disability Living Allowance and Incapacity Benefit. If you do not pay the monthly sum agreed by the court on a regular basis you may receive a warrant of execution. This is issued by the county court of bailiffs. If you still do not make any payment, the Bailiffs may come round to your property and remove goods in order to cover the costs of the original account.

If you own the property a charge may be put on your home. This means that when the property is sold, the debt must be repaid before any excess is passed to the owner. If a lot of money is owed and you don’t have any way of paying off the money you may be made bankrupt. There is a cost involved and is not normally an action considered by people who have a mental health problem. If it is to be considered, advice should be obtained from insolvency practitioners. They can be found in the yellow pages or at Yellow pages online .