Debt and Mental Health: Helpful Advice and Support

Financial problems are something nobody wants to face. When things do go wrong it can have a huge impact on every aspect of our lives. In this post, we’ll be looking at how to protect your mental health when dealing with debt.

What's the Link Between Money and Mental Health?

Money can’t buy you happiness but debt certainly can’t either. In fact, there’s a clear negative relationship between debt and our personal well-being. According to the National Debtline charity, 50% of those in debt were suffering from mental health problems such as depression, stress, or anxiety.

Our money and mental health are intrinsically linked, with one often affecting the other. Struggling financially can impact our mental health by causing us to worry, and struggling mentally can lead us to ignore our monetary issues.

This creates a vicious cycle: the stress of our debt makes us bury our heads in the sand; our inaction worsens the problem, and so on.

It’s important to recognise this cycle and act to resolve it as soon as possible. One of the best things to do initially is to take steps to improve your well-being.

How Do I Protect My Well-being When in Debt?

Debt Breathing Spaces

Being bombarded with invoices and demands from creditors whilst worrying about potential visits from debt collection agencies is enough to make anyone feel down. This makes it harder to spend time thinking about what steps need to be taken to resolve your issues.

It’s for this reason that the government introduced the Debt Respite Scheme in May 2021.

The scheme grants people in debt a window of legal protection from their creditors while they make arrangements. Once the “breathing space” is in effect, creditors cannot contact you, charge any interest, or make enforcement actions on your debts.

The standard breathing space offers a 60-day respite. A mental health crisis breathing space offers respite for as long as it takes for the crisis to be resolved, plus an additional 30 days. You can use this time to formulate a plan of action.

Important: Moore Recovery cannot instigate one of these breathing spaces. They must be initiated by a Financial Conduct Authority (FCA) approved debt advice provider, like the Citizen’s Advice Bureau.

Debt and Mental Health Evidence Forms

Debt and Mental Health Evidence Forms (DHMEF) let your creditors know about your current mental health issues so they can consider them going forward.

A health or social care professional must complete the form. GPs used to be able to charge a discretionary fee for completing the form but they must now complete the form free of charge. This makes it more accessible to those who need it. Psychologists, nurses, and social care workers may also complete the form.

The form confirms your condition and asks useful questions about your situation:

How does the mental health problem(s) affect their ability to manage money?
How is the person’s ability to communicate affected by their mental health problems?
Is there anything else you could tell us about that would help the person (severity/duration; relevant treatment; whether in crisis)?

Creditors are bound by the FCA to have measures in place for vulnerable debtors, so completing a DHMEF may reinform the way they treat you going forward.

What Tools Are Available to Help Me With My Debt?

The answer to this question ultimately depends on your situation. If your debts aren’t too big, you might want to pursue a more informal option such as a Debt Management Plan. If your debts are bigger, you may wish to choose a formal insolvency solution such as bankruptcy or an IVA.

However, deciding between these varying options when you’re having problems with your mental health can be daunting.

Don’t feel you have to tackle the issue by yourself. It’s important to remember that help is always available. Our Insolvency Practitioners deal with issues regarding debt every day, so we understand how difficult it can be to face. We can offer you patience and understanding, guiding you to the best solution to your situation.

Sources of Support

Our Director, Neil Dingley, is a long-time supporter of Mind and currently serves as trustee and treasurer. Mind offers a range of resources supporting those who are struggling due to debt, which can be accessed here.

Listed below are some additional resources for you to look at:

If you’re struggling with unaffordable debt, speak to one our team. Our insolvency practitioners can guide you to the right solution for you, helping you get back to a debt-free life.

Get in touch to book a free, no-obligation consultation today.