Debt and mental health: Covid has increased pressure but help is available | Borrowing and debt

[ad_1]

Sarah Douglas has struggled with debt and poor mental health for decades, and says the Covid crisis has made things worse. “The pandemic has exacerbated existing problems for people like me,” says the 51-year-old from Bristol. “It’s very stressful dealing with uncertainty but for someone who is prone to mental health issues, it’s especially bad.”

Nine years ago, Douglas was diagnosed with autism and also has ADHD. “I didn’t understand why I struggled with money so much before that,” she says, “I wasn’t good at budgeting, the low income didn’t give me much to live with, and stress makes it worse.”

Douglas, who has been on long-term sick leave from work since December 2020, has accumulated £22,000 credit card debts over 10 years. “I was going to spend and get depressed. It was a vicious cycle.

Sadly, Douglas is far from alone, and charities fear their services will come under increasing strain as debt problems escalate in the wake of the coronavirus crisis.

Research from the Money Advice Trust, the charity that runs National Debtline and Business Debtline, found that a quarter of people experiencing financial hardship as a result of Covid-19 reported a negative impact on their mental health.

“Many people caught in the acute phase of the outbreak, who saw their finances severely affected and their debt piled up, also reported a decline in their mental health,” says Jane Tully of the Money Advice Trust.

“Without concerted action to help people return to a stable financial footing and provide safe ways out of debt, there is a real risk that the debt problem will become one of the enduring legacies of the epidemic.”

Low-income people are more likely to be affected by mental health problems. The typical income of people with common mental health conditions is £8,400 less than the rest of the population, according to research by the charity Money and Mental Health Policy Institute.

People with poor mental health are more likely to be out of work, in part-time jobs and low-paying occupations. The freezing of working age benefits in recent years has also contributed to the deterioration of the financial situation of people with poor mental health.

The pandemic has decimated many vulnerable people with mental health issues, and has led to a number of new cases. The latest NHS figures show that the number of people who are in contact with mental health services has reached 1.27 million, the highest number since the first lockdown in March 2020.

“The pandemic has exacerbated existing problems for people like me,” Sarah Douglas says.

The pressure on people’s personal finances is expected to become more severe as the government’s Covid support plans are withdrawn. With the furlough scheme ending, there is a risk of further layoffs, while the ban on evictions of private tenants is over. The average amount of rent owed by those with rent arrears during the pandemic is around £900, according to the National Residential Landlords Association.

Charitable StepChange says it saw the number of people in severe debt rise from 1.7 million to 2.4 million from March 2020 to January 2021.

The organisation, which recently came under fire from the UNITE union for announcing layoffs itself, says temporary emergency support measures through furloughs, interest hikes and creditor payments deferrals mean debt problems are “starting” for millions of families.

“About 14 million people have experienced income damage affecting their ability to pay basic costs since March 2020, and those with mental health issues have also been disproportionately affected by the debt problem,” says Sue Anderson of StepChange.

Half of our new clients who went through full debt guidance last year had additional vulnerabilities, and about a third of those are attributable to mental health. Withdrawing support measures, which have been a lifeline for many vulnerable people, such as the £20 increase in universal credit, will lead to further hardship.”

Charities are calling on the government to continue advancing the universal credit, which is currently set to expire in September. “It has been a lifeline for millions,” says Ms Claire Moriarty, chief executive of Citizens Advice.

“Scheduled to end in the fall, just as the vacation scheme comes to an end, which will leave many people on the edge of a new financial cliff. Maintaining such support will be vital to prevent families from needlessly suffering.”

One of the problems people face is the stigma surrounding money and mental health issues, which means that some affected by either or both do not seek help.

People who struggle are trying to “see the big picture, because it’s a common problem, so they shouldn’t feel ashamed,” says Connor Darcy, chief of research and policy at the Institute for Money Policy and Mental Health.

Talking about the problem with someone close to you you trust is a good starting point. This can help lighten the burden and help you deal with your concerns to make your debt seem more manageable. If you don’t feel comfortable talking to someone, charities like Citizens Advice and StepChange can also help you.

“Although it is daunting, talking directly to lenders can also be beneficial,” says Justin Pasini, CEO and co-founder of credit reference agency ClearScore. “They may be able to offer support with a payment plan or pause interest payments — after all, it’s in their best interest to help you make all your payments.”

I now understand that there is nothing wrong with suffering from debt and mental health problems Sarah Douglas

For Douglas, approaching StepChange for help four years ago was a breakthrough. “They saved my life,” she says.

She is now on a debt management plan with three months of repayment leave. It has no overdraft or access to credit and a basic bank account.

However, she is concerned that the impact of the pandemic may undermine her progress.

“ADHD brain connectivity can lead to a lot of impulsive behaviors, and in my case, that, combined with stress, depression, and anxiety, led to reckless and reckless spending. But I now understand that there is no shame in suffering from debt and mental health issues.”

What to do if you are struggling

“Most of them can set up a payment plan or put your interest on hold once you explain your difficulties,” says ClearScore’s Basini. Under the Lending Act, financial firms are required to treat those debtors—particularly borrowers with mental health issues—with compassion and help create a viable repayment plan.

Seek help from charities and online counseling services

The Mental Health and Money Advice website offers practical advice, support, financial tools and other contacts.

You can seek anonymous advice from debt charities such as National Debtline (nationaldebtline.org or call 0808808 4000) and StepChange (stepchange.org or call 0800138 1111). Citizens Advice has launched a debt helpline in response to the pandemic at 0800240 4420 (itizensadvice.org.uk).

Consider a specialized debt repayment plan

For example, StepChange offers a “Covid payment plan” for anyone struggling with debt on a low income during the pandemic. This enables you to make reduced debt payments for the period when your income is low, up to a maximum of 12 months.

Check if you are entitled to any benefits

Use the free calculator from the charity Turn2us.

Take advantage of the breathing space

You can apply for a two-month “breathing space” through a debt counselor if you have serious debt, during which you cannot be chased by lenders while seeking help. If you are receiving treatment for a mental health crisis, this is extended for as long as you are in treatment, and for 30 days after that.

Make sure you are aware of all the help available

Research by Citizens Advice reveals that people with mental health issues are paying more for essential services, such as energy, up to £1,550 a year. Contact your supplier and ask for help with your billing, rest assured that you are in the best deal.

Other tips and help resources

The National Debtline, in partnership with the Institute for Money Policy and Mental Health, presents a fact sheet on how to deal with debt. This includes how to provide evidence of your mental health status to creditors, by filling out the Proof of Debt and Mental Health Form.

You can include details of your personal financial circumstances in future product applications by adding a correction notice to your credit file which lenders consider along with your application. For example, you could mention that you are currently seeking advice from a debt charity to manage future payments, if your credit score has suffered due to mental health issues.

In partnership with Barclays, Mind is launching a mental health investment to support people with mental health issues who are facing financial hardship. Further advice can be found at www.mind.org.uk/money or by calling 0300 3393123.

[ad_2]