We all get stressed about money from time to time, but when you really feel your back is to the wall or that you’re peering down over the edge of a fiscal cliff it can have a severe impact on your mental health. All too often this can lead to a self perpetuating cycle whereby the more trouble you’re in, the harder you find it to make good decisions and take positive steps.
It’s no coincidence that, according to recent surveys, just under half of people who’ve suffered from mental health problems also had serious levels of debt.
If you or someone you know is facing either problem or an interlinked combination, it is massively helpful to try and tackle the problem as soon as possible. Of course, to do this it is necessary to stop and take stock of the situation.
In monetary terms, this comes down to assessing whether you are at the ‘crisis’ level of debt that is likely to cause you serious problems and what your options are likely to be with regards dealing with it. In some cases it will be an situation that you can handle yourself and we have plenty of articles here on ways of reducing your outgoings and organising your finances to make things manageable, from saving on energy, to savvy shopping techniques to reduce the cost of your visits to the supermarket and reclaiming unfair bank charges.
Though you will find more specific advice in these pieces, there are general principles you should remember when dealing with debt.
Don’t Add to It: Many people compound there debt problems by getting into a chain of borrowing, using loans to pay of cards etc. Though it might feel logical to consolidate by use of credit, it will cost you more. Wherever possible cut back to avoid the need for more credit.
Reduce the Interest: One of the easiest ways to make debt more affordable is to lower the interest rate. This will leave you with more in your pocket and will help you make a bigger dent in what you owe. The simplest way to do this is by a balance transfer to a 0% card. Click the link for more.
Prioritise the Most Expensive Debts: If you have money available to spend on repayments it makes sense to focus on those with the highest interest. The quicker you pay that off, the more you will save. As such, it is logical to stick to minimum payments on the rest of your debts and put as much as you can afford to clearing that which has the highest rate.
If you’re at a level of debt where you cannot afford to make the minimum payments required and still provide yourself with the essentials you need to get by then this is sometimes referred to as a ‘crisis’ level of debt and it may require a different approach. If this applies to you it is important not to panic, as though it may seem though, there is always a way to improve the situation. A great first step is to start making use of the free help that is out there.
It can be difficult to admit debt problems to ourselves, let alone or friends and family. We may feel ashamed or fear being stigmatised. However it is important to remember that there are people around who will want to help you. If you don’t feel like you can handle talking to someone you know, then be sure to look to organisations that will help you (which you should do regardless).
Free Debt Counselling
Unfortunately, there are many companies that seek to make money from those struggling with debts and this can be confusing for those looking for free help who cannot afford to be paying for a service (many debt management companies, for example, will take a slice of the repayments that they arrange for you.) The key is looking to groups, such as the following, who exist purely to help people. Try talking to:
- Citizens Advice
- National Debt Helpline
- Step Change
- Christians Against Poverty (Please note that, though this organisation has a religious grounding they exist to help anyone who needs them, regardless of faith.)
All of the places offer debt counselling and all of their expertise is offered up in a non-judgemental, completely welcoming manner. They are, to put it simply, on your side. They can help you get your affairs in order and offer invaluable advice on how to prioritise your debts so as to lessen their potential impact on your life. Though they do not have special legally enshrined powers that allow them to hold creditors at arm’s length on your behalf (as, say, an insolvency practitioner can) they do have clout and a lot of know how in dealing with these situations. This itself can help you negotiate better terms and come to an arrangement that might prove workable.
Having a debt counsellor on board can certainly give you some more breathing space. If you’ve sought help then, according to the Credit Services Association’s agreement with the government, you should not be contacted by collectors again for at least 30 days. Furthermore, if you are suffering mental health problems then, in accordance with the Lending Code, your creditors are obliged to consider keeping the issue in house rather than selling it on to debt collection specialists who, typically, take a more aggressive approach to recovering monies owed.
They can also take your side in a number of emergency situations and help you reach a better outcome. For example, if you are facing disconnection at the hands of a utility company (bear in mind that this is very rare) they can help arrange a long term payment plan to keep you on the grid. Likewise, they can help get a plan in place if you are in danger of having your house being repossessed, even if proceedings have already begun.
If you are being threatened by bailiffs they can help keep them from your door by applying to court to halt the creditor’s actions. Again, they can also help you arrange a plan for repayment that doesn’t involve the added expense of paying someone other party for arranging things for you.
Your Condition in Relation to Money
As well as assessing where you stand with regards to your financial situation, if your mental health is a worry it’s best to look for warning signs and take action when they appear. Depression usually takes time to set in. If you are aware of what you are likely to go through you can look for indicators that you need support and then seek it. Early warning signs often take a physical form. You might notice aches and pains back, neck and head and your skin may become blemished. You could also find you have a shorter fuse, and are more prone to argumentative outbursts. At this point you reach out to your friends and your GP. They will be able to recommend a course of action if you find things are worsening in your private and professional lives (if work is proving too much, inform your boss and ask to put on a reduced work load for the time being).
If you find that you are losing weight, find it difficult to concentrate and think clearly, have a diminished libido, and that you experience lows that last for weeks or more then you will need to the help of treatments such as cognitive behavioural therapy, which can help you find more positive ways of thinking and approaching the things occupying your mind, and possibly medication as well.
If you are suffering with a mental health problem then acknowledging it early will massively aid your recovery, and will also help you find the right method of dealing with your debts. One of the cruel ironies of dealing with debts and mental health issues is that you have to face intimidating challenges at the precise time you feel least able to take them on. For instance, many people find that they are less able to work during low periods, which can lead to a reduced income. This can compound problems.
However, if you have a diagnosed condition, you could find that you are entitled to various benefits. It’s imperative that you get the money that you are entitled to. You could be entitled to Personal Independence Payment (PIP) or Employment Support Allowance (ESA).
In the eyes of the government a mental health condition such as depression or bi-polar disorder can be defined as a disability if it stops you doing day to day things such as “working set hours”. When claiming for ESA the Department for Work and Pensions will need to be able to verify that you have a limited ability to work (with the exception of hospital inpatients). This means you will need to fill in forms detailing your condition and the difficulties it causes you and it may mean you need to attend an assessment.
Many people believe that the Work Capability Assessment (WCA), which is used art part of the decision as to whether award the benefit or not, is flawed. There are people who can help advise you on approaching it to make sure you are treated fairly. There is a wealth of information on the assessment provided by the mental health charity Mind.
PIP is also subject to ongoing assessments, with the amount you’ll get varying according to how you condition affects you (there is a component for day to day living and one for mobility). Payments can be between £20 and £135 a week, paid every four weeks. There’s more on how to claim here.
As well as making sure you get the money due to you, you should also be aware of how your condition may affect your spending. If you are depressed, obsessive compulsive or bipolar you may spend money erratically. It can be a good idea to try and limit your ability to make sudden expensive decisions as a safeguard against choices you might regret. You might ask to have your card limits lowered or give them over to someone you trust. Shopping online can also help as you will have seven days to make a return if need be.
If you tell your bank about your condition they can help you stay on top of things by looking out for erratic spending and contacting you if things seem unusual. They can even put limits on your spending to help you stay within your means. You don’t need to worry about telling your bank about your condition as they cannot use the information to discriminate against you. Indeed, they cannot even record it without your express consent.
Dealing with Creditors
Whether you tell creditors about your condition can be a difficult decision. It can have benefits but it can sometimes difficult to know if they will act on the news in the appropriate manner or even take note of it. One good sign to look out for is a company that has a policy on mental health problems or a particular member of staff dedicated to dealing with more vulnerable customers. If you do disclose information, lay down how you expect the information to be used, and how it should not be used. It’s worth reminding them that under the Data Protection Act information regarding mental health is deemed sensitive.
The Financial Ombudsman can help uphold your rights if creditors are not treating you fairly or sympathetically as lenders are supposed to under the Lending Code. Banks in particular should take steps to be considerate. This includes keeping debts in house and using specialist teams you are experienced at dealing with those facing mental health difficulties to handle your case.
In conclusion the most important thing is to seek help from the sources available to you, both in relation your money and your health. Friends, family, carers, case workers, counsellors and GPs can all play a part in helping you to set a clear course out of the woods and feel more robust.