In today’s world, it’s important to understand how debt can affect our mental health. Beyond just numbers, debt can seriously impact how we feel, increasing stress, lowering self-esteem, and affecting our overall happiness.
In this article, we’ll explore how being in debt can affect our minds and emotions, and we’ll discuss some ways to cope with financial stress. Come along as we take a closer look at the link between debt and mental well-being.
So, without further ado, let’s get started…
Table of Contents
MORE
LESS
Why and how do people get into debt?
People end up in debt not just because they spend too much or use credit cards excessively. Job loss or being laid off is a major reason for financial trouble, hitting anyone regardless of their money habits.
In fact, life changes such as losing a job, health issues, or relationship breakups can make it hard to pay bills. In those situations, adjusting to these changes can be tough financially.
People can end up in debt for a variety of reasons, and often it’s a combination of factors. Here are some common reasons why people may find themselves in debt:
How people get into debt can vary widely depending on individual circumstances. However, it often involves a combination of unexpected expenses, lifestyle choices, and financial challenges.
Need more Help to deal with Unaffordable Debts?
If you’re unsure how to deal with unaffordable debts, feel free to fill out our online form, and our Advice Team will get back to you to guide you.
How Can Debt Affect Your Mental Health?
Having unaffordable debt is one of the main reasons for many people to get stressed and worried. The Royal College of Psychiatrists conducted a study on debt and mental health, revealing that half of adults struggling with debt also experience mental health issues. These range from ongoing feelings of anxiety and sadness to diagnosed mental health conditions.
Here are some ways that debt can significantly impact your mental health:
- Stress and Anxiety: Constant worrying about debt, bills, and financial obligations can lead to high levels of stress and anxiety. The pressure to meet payments and the fear of falling further into debt can be overwhelming.
- Depression: Dealing with debt can trigger or exacerbate feelings of sadness, hopelessness, and despair. The burden of financial insecurity and the sense of being trapped in a cycle of debt can contribute to depression.
- Poor Self-Esteem: Being in debt may lead to feelings of shame, guilt, and inadequacy, particularly if individuals perceive themselves as being irresponsible or unable to manage their finances effectively. This can erode self-esteem and self-worth.
- Strained Relationships: Financial stress caused by debt can strain relationships with family members, friends, and partners. Arguments over money matters can lead to conflict, tension, and breakdowns in communication, further exacerbating stress and negatively impacting mental well-being.
- Impact on Daily Functioning: Dealing with debt can consume a significant amount of mental energy and focus, making it difficult to concentrate on daily tasks, work responsibilities, or personal relationships. This can impair overall functioning and productivity.
- Physical Health Effects: Chronic stress related to debt can contribute to physical health problems such as insomnia, headaches, digestive issues, and even cardiovascular problems, further exacerbating mental health concerns.
- Avoidance Behaviors: Some individuals may cope with the stress of debt by avoiding confronting their financial situation, which can lead to further financial problems and exacerbate feelings of helplessness and anxiety.
How Can Mental Health Problems Affect Your Finances?
Debt can really mess with your head. Constantly worrying about money can make you feel anxious and down. You might lose sleep stressing about bills you can’t pay or getting deeper into debt. And the shame of owing money can make you feel like hiding from everyone.
Here are some of the common ways that mental health problems can have a significant impact on your finances:
What Steps can I take if I think I have a debt problem?
Remember, facing a debt problem can be overwhelming, but you’re not alone. Seeking help and taking proactive steps to address the issue can help you regain control of your finances and work towards a brighter financial future.
If you suspect you’re facing a debt issue, here are some general steps you can take to address the situation:
What is a Breathing Space Scheme And How Can It Help Me?
The Debt Respite Scheme, also known as ‘Breathing Space,’ offers individuals in England or Wales temporary protection from creditors while they seek debt advice and create a repayment plan. This scheme provides a period of up to 60 days during which individuals can receive relief.
During this time:
- Enforcement actions against you are prohibited.
- Creditors are restricted from contacting you regarding debts included in your Breathing Space.
- Interest or charges cannot be added to your debt.
If you are undergoing mental health crisis treatment, your protection from creditors will extend for the duration of your treatment, plus an additional 30 days.
To apply for the Breathing Space scheme, you’ll need to consult with a debt advisor. They’ll handle the application process on your behalf if it’s deemed appropriate. You can locate a free debt advisor through the MoneyHelper website, where you can receive confidential advice either online, over the phone, or in person.
If you’re undergoing mental health treatment and are unable to communicate with a debt advisor, someone else can act on your behalf.
Applying for Breathing Space is free, but some debt advisors may charge a fee.
To qualify, you must:
- Not have a debt relief order (DRO), an individual voluntary arrangement (IVA), an interim order, or be an undischarged bankrupt at the time of application.
- Not currently be enrolled in the Breathing Space scheme.
- Not have utilised the Breathing Space scheme in the past 12 months, unless it was during a mental health crisis.
What is a debt and mental health evidence form?
The Debt and Mental Health Evidence Form (DMHEF Form) enables your creditor to receive information and updates regarding your mental illness from a healthcare professional, with your consent.
You can consider utilising this form to inform your creditors about your situation. It will allow them to consider your mental health circumstances and adjust their debt collection process accordingly.
What should I do if my debts are huge and I cannot afford to settle them?
Sometimes, you may face difficulties in agreeing to the proposed payment plans from your creditor or the Debt Collection Agency, especially if they are financially burdensome.
In such situations, it is advisable to explore alternative debt solutions that can effectively address your debt-related concerns. In the UK, there are various alternative debt solutions to consider.
However, it’s crucial to keep in mind that each of these debt solutions has specific eligibility criteria. Selecting the right one can lead to debt resolution, while choosing the wrong one could worsen your financial circumstances.
Hence, seeking guidance from a professional debt advisor is a prudent step to take if you find it challenging to determine the most suitable debt solution on your own.
If you need personalised assistance based on your current financial situation, please feel free to complete our online form by clicking here to receive help from our Advice Team.
Seek Free Financial Advice
There are a number of debt charity organisations that you could use to get professional debt and financial advice free of charge. Their advisors will inquire deeply about your debt issue and will help you in finding a reliable solution to overcome it.
Below is a list of charity debt organisations where you could get free debt help:
Final Thoughts
The connection between debt and mental health is clear: debt can really mess with your head. It causes stress, anxiety, and even depression. But it’s a two way street. Mental health problems can also mess with your finances, leading to decreased income and increased expenses.
The key is to tackle both issues head on.
For that, you can seek help from debt advisors and consider options like the Breathing Space scheme or Debt and Mental Health Evidence Form. In order get acceptance for these solutions, communication with creditors is crucial. If you find yourself feeling difficult to communicate with your creditors, then there are free debt advice providing charity organisations, like StepChange and Citizens Advice, to get debt help.
Dealing with debt requires taking action and looking after your mental well-being. By addressing both aspects, you can work towards a better financial future and peace of mind.
Key Points
- Debt is often mistakenly associated with irresponsible spending, but common causes include unavoidable life events such as unemployment and health issues.
- Mental health conditions like depression and anxiety can severely impair a person’s ability to manage their finances, leading to potential financial mismanagement.
- Financial struggles can worsen mental health issues, which in turn can make managing debt more difficult, creating a vicious cycle.
- Recognising early signs like anxiety about finances or avoiding communication from creditors can indicate the need for intervention.
- Free services like StepChange and National Debtline offer confidential, personalised advice to help manage and reduce debt.
- Tools like the breathing space scheme can provide temporary relief from debt collection, allowing individuals to reorganise their finances.
- It’s important to fill a Debt and Mental Health Evidence Form for those needing to demonstrate the impact of their mental health on their financial situation to creditors.
- Using available tools and resources effectively can help maintain financial stability and improve mental health.
- It’s important to understand the interplay between mental health and financial stability. Plus, utilising targeted advice can lead to improved management of both, enhancing overall well-being.
FAQs
Here are 4 steps you can follow:
Debt stress syndrome is a term used to describe the physical and psychological symptoms that arise from excessive financial debt. These symptoms can include difficulty concentrating, sleep disturbances, changes in eating habits, and overall increased stress levels.
Medical professionals have recognised the impact of debt on both mental and physical health, leading to the identification of debt stress syndrome.
Researchers have studied the health effects of debt, highlighting the need for individuals to address their financial situation to alleviate the associated stress and its negative consequences on well-being.
Facing debt can be mentally challenging, but here are six steps to help you navigate through it:
Utilise tools like budget planners, set up automatic financial monitoring systems, and engage with support networks. Regularly reviewing your financial health and using resources designed for mental health and financial management can help maintain stability in both areas.
Yes, it’s possible. When you honestly and clearly communicate your situation to your creditors, they may become more willing to offer specific concessions regarding your loans. Additionally, in some instances, when creditors realise that they’re unlikely to receive repayments, they may even consider writing off your loans.
For most types of loans, they become uncollectible six years after your creditor last contacted you about the loan or six years from the last acknowledgement of the loan between you and your creditor. However, for mortgage loans, the limitation period is twelve years after the last contact or acknowledgement between you and your creditor.
No, I don’t advise ignoring your debts. Ignoring them won’t make them disappear; instead, your interest will continue to accumulate, and missing payments will negatively impact your credit score.
Debt collectors may contact you or approach you to request repayment of your debts. However, they are not permitted to use coercion or threats. Understanding how to avoid such situations is crucial. Threatening legal action is considered harassment under UK law and is prohibited.
Yes, creditors may seek to garnish your wages through a court order to assist in debt repayment. This court-issued order is known as an “attachment of earnings” order.
No, in the UK, you cannot be imprisoned for being unable to repay your debts. The only circumstance where imprisonment may occur is if you have engaged in fraudulent activities related to your debts.