Debt and mental health

There are many reasons why people fall into debt.

If you experience mental ill-health, it can affect your personal finances. Debt is also a factor that can trigger things such as anxiety or depression.

Why and how do people get into debt?

There is often a common misconception that people find themselves in debt due to living an excessive lifestyle, or going ‘wild in the aisles’ with credit cards and store cards. The truth might surprise you: unemployment and redundancy are actually the most common triggers for debt problems, and can happen to anyone, no matter what their attitude to money may be.

Whether you’ve lost your job, are suffering from poor mental or physical health or you’ve separated from your partner, changes like this can mean that you struggle to pay your household bills and debts. Having to adjust to such a financial change can be difficult, even if it’s only going to be for the short term.

How can mental health problems affect your finances?

Although people diagnosed with mental health problems such as bipolar and depression are more susceptible to debt problems, there are many reasons why mental ill-health can affect the management of your finances.

A lack of energy can make it harder to keep track of money, and rash or unwise decisions, can result in spending money on things people can’t actually afford. In more serious cases, taking time off of work may cause a sudden reduction in a person’s income and being admitted into hospital can also make it harder to keep up to date with bills.

Mental health problems and conditions such as dementia may also result in people having difficulties making decisions about money. The ability to make decisions is known as mental capacity and in England and Wales mental capacity issues are covered by the Mental Capacity Act.

It is unlawful for people to make decisions on another person’s behalf about what they do with their money unless they have the legal authority. You can find out more about financial decision making and the Mental Capacity Act in this booklet.

How can debt affect your mental health?

A 2010 study from the Royal College of Psychiatrists found that half of UK adults in problem debt are also living with mental ill-health. These ranged from a consistent feeling of anxiety and low moods, to diagnosed mental health disorders.

Much of debt-related anxiety can be due to a lack of support from creditors and from the individual’s surrounding family, friends and employers. Debt can be a considerable burden, made worse by dealing with it alone. Another issue of debt anxiety is the lack of quality sleep it can often cause.

Losing out on a good night’s sleep can not only affect your mood and energy levels, it can also have knock-on negative effects in other areas of your life such as family and career. All of these things in turn can contribute to a person’s debt problem.

Questions to ask yourself if you think you may have a debt problem

  • Do I often feel anxious when thinking about how I will manage my repayments?
  • Am I struggling to or do I routinely miss the minimum payments towards utility bills, credit cards or rent?
  • Do I avoid telephone calls from unknown numbers and ignore letters from creditors?
  • Am I unable to set aside money for a sudden and unexpected reduction in my income such as redundancy, car expenses or emergency repairs?

If you answered ‘yes’ to any of these questions, then you may want to consider getting help.

How do I get help?

Help is available for anyone dealing with problem debt and the anxiety it can cause. ShelterCitizens Advice Bureau Debt Management and Debt Support Trust all offer a free advice service.

Charities such as Step Change can also work out a debt solution like a debt management plan (DMP)token payments or an individual voluntary arrangement (IVA).