Debt and mental
This leaflet is for
- who has a mental health problem and who owes money or is in
- whose mental health has been affected by debt.
- How you might get into debt
- The descent into debt
- How being in debt might make you feel
- How to start tackling debt
- Sources of help
- Working with a money adviser
- Debt and mental health
- The next steps available
- Further information
One in four adults will have
a mental health problem at some point in their life.
One in two adults with debts
has a mental health problem.
One in four people with a
mental health problem is also in debt.
Debt can cause - and be caused by - mental
health problems. It's tempting to just not think about it – it can
be uncomfortable and can make you feel guilty, depressed – or even
hopeless. But sorting money problems out can help you to feel
better – and to stay well.
- Don’t ignore debt – it will
only get worse.
- Explain your problems to
someone you trust.
- Be sure to get expert
- Take control of your money
How do people get into debt?
If you are on benefits, or a low income, you
may find that you just don't have enough money to cover what you
need to spend. When things are bad in the economy, you are more
likely to lose a job or to have to make do with less benefit
There are some common things in life that can
push you into debt – or make an existing debt worse.
You may lose your job, lose a loved one,
break up with your partner, or there may be times when you
have to borrow money, or stop paying bills, to cope with a new
Staying unwell - or getting worse
Mental or physical illness can push
someone into debt. If you lose your job – or have to spend a
long time off work – you won't have so much money and you may
actually have to spend more on paying for prescriptions, travel to
health services or trying to find work.
Your benefits may be changed, missed or even
stopped. You may not be claiming all the benefits
If your income is below the average, you are
more likely to get into debt in the first place.
If you have to live on a low income for a long time, your debts can
mount up because you have to replace essential items. Eventually,
you may find that you just can't get by without borrowing
Sometimes you just need to buy an essential –
like a washing machine. Some types of problem – like mania – can mean that you
have spending sprees and buy lots of stuff that you don't need.
If you are mentally unwell you may stop seeing
people, find it hard to concentrate, find it hard to communicate or
just find it too much to think about money and bills. You can
easily get into debt from just ignoring paperwork and bills.
Pressure from outside agencies
A bank, or a loan company – or even a loan
shark – can encourage you to take out another loan - perhaps even
to pay off an existing debt - or to get a credit card. If your
credit card limit increases, you may feel that it's safe to spend
You may feel that your creditors don’t
understand the effect of your mental health on how able you are
able to control your money. For instance, if you have
'manic spending sprees', they may see these as simply fraudulent
and not give you the help you need.
“I am dependent on Disability Living Allowance as a source
of income. I was put into an impossible situation because a form
was misplaced when I renewed the claim. It took over a year to sort
out, during which time I was inexorably drawn into debt. It put an
impossible strain on my life worrying about bills, whether I could
replace anything if it broke, not being able to go out or to treat
myself and not knowing whether the claim would be renewed or not.
It was a constant worry, worry, worry that affected both my
physical and mental health.”
One person's journey into debt
- I missed some credit card payments and went
overdrawn on my bank account …
- I then had to pay a large one-off penalty fee for the overdraft
and a high rate of interest which meant that I could not get out of
overdraft ….. so I had to keep paying the high rate of interest
- I could then not afford to pay my gas, rent or electricity
bills – I could not work out whether to pay them and ignore the
bank or to pay the bank and go without heating and light …
- I couldn't work out what to do and found I was just getting
upset by it – so I didn't pay either the bank or the housing
association or the power company .. .
- I started to get red letters and threats of legal action …
- I agreed to pay off the bank but the repayments they set were
too high ….. so I still couldn't pay them ...
- And after I hadn't paid the rent for a couple of months, the
bailiffs came and took my TV and some furniture and the Housing
Association threatened to evict me …
This is one person's story. Yours may
well be different.
Being in debt can make you feel
- That everything is out of control and there
is nothing you, or anyone else, can do about it.
- Hopeless, especially if your debt is getting
- Embarrassed to talk to anyone about your
- Guilty - that the problem is your fault, even
though it's been caused by your mental or physical health
- Depressed and anxious.
“I felt that I was financially
savvy. I had my ISA, my savings accounts and no credit card. There
was just one thing that put a spanner in the works – my mental
health….For me mental health has equalled debt, poverty and social
exclusion. Many people may not view living on benefits as debt, yet
I feel indebted by this. I am currently unable to do my job, pay my
own rent or be financially independent.”
But how can I start sorting out my debt?
However much you owe – the sooner you begin to
tackle it, the sooner you solve it.
First of all, tell someone you trust about it.
This could be a friend, relative, colleague or someone from your
mental health team. They can help you to feel less powerless and
more hopeful – and can put you in touch with people who can help
OK – so who can help?
advisers are experts in tackling debts and can give you
both advice and support. You need an adviser who is free of charge,
confidential and independent.
an adviser decide on what you want:
- Advice only – some services will not take
action for you, but instead will assess your needs and guide you
through the things you need to do.
- Advice and representation – some services will
do the work for you, including negotiation with any
- Face-to-face advice – you may prefer to talk
to someone in person. However, these services are popular and it
can be difficult to get an appointment.
- Telephone advice – this may suit you if you
have mobility problems, caring responsibilities, live in a rural
area or find it difficult to leave your home and meet people in
person. Some of these advice centres have specific times when they
deal with calls, others specialise in telephone advice.
- Internet advice – some services offer online,
interactive and individual advice.
Some advice services are very busy. Getting
through by phone may take you a few tries. If you decide to visit
without making an appointment, you may need to queue on a
first-come-first-served basis. This can be pretty stressful in
itself and not all services offer this type of drop-in session
every day. If you check in advance, you can save yourself a lot of
stress and inconvenience.
Finding a money adviser
Sources of free and independent advice are
listed at the end of the leaflet. You can also search for local
services on some organisations’ websites, or phone their general
A money advisor will:
- interview you to find out what the
problems are and help you to sort out which are the most important
- help you draw up a budget – they can advise
you on ways to increase your income and reduce your
- advise you on how to deal with the debt,
including bankruptcy, negotiating with creditors and any
arrangements you have made yourself;
- advise you on other sources of help or
They may also be able to:
- help you to negotiate with creditors;
- help with form filling (e.g. claiming social
- represent you at court hearings for
Working with an adviser
Money advisers are not mental health experts.
However, most agencies should have at least one adviser who
has had some training in working with people with mental health
problems. You can find out if an agency has someone like this and
ask for an appointment with them.
Decide what you want (and don’t want) to tell
the money adviser about your mental health problem.
If you feel uncomfortable about going alone to
see a money adviser, ask a friend, relative or someone from your
mental health care team to come with you. You may only need them to
come with you for the first session, but don't be afraid of asking
for them to come again if you feel you need it.
Before advice sessions
Before you visit, or phone, an advice centre
or money adviser, you need to:
- gather together all the paperwork or bills;
- think about how your mental health affects how you manage your
finances and repay your debt.
Debt and your mental health
When trying to recover a debt, creditors may
be entirely unaware of your mental health problem. They can act in
inappropriate, and sometimes distressing ways.
You will need to decide if you want to tell
your creditors about your mental health difficulties. If you do,
then your money adviser also needs to aware of your mental health
The Debt and Mental Health Evidence Form
This is a standard form for social workers
or mental health workers to use. It helps them to give
clear and relevant evidence about how your mental health affects
how you deal with money. It is quick to fill in and has been
recognized by major UK creditor and advice membership
“I had to choose between feeding myself or
the gas meter. As a single mum I was used to juggling plates for a
long while with the stigma of being an unmarried mum on benefits.
Then with the distress and stigma of becoming mentally ill, all the
plates came crashing down around me. A once capable person became
incapacitated by the worry of being homeless and unable to provide
for myself and my child. Even when working, paying back my
creditors seemed an insurmountable task for someone who by now had
become a helpless wreck just wanting to close her eyes and never
If you have any available income, you can make
a repayment offer (but only one which you can realistically meet).
If you do this then a creditor should be asked to freeze any
interest on the debt.
If you have very little available income, you
can make a nominal/token repayment (e.g. £1) or request payment
- “Full and final”
This is when creditors may accept a lump sum
offer which is smaller than the original debt.
This is not standard practice, but some
creditors will write off the debt when a person has mental health
You make a single monthly payment to a debt
management agency which then pays several creditors for you (you
may have to pay a fee for this).
This is an option if you owe a large amount of
money and don’t have any assets. Bankruptcy lasts for up to a year
(with restricted access to financial services). After this, debts
are usually written off. However, the bankruptcy is registered with
credit agencies for 6 years and can make it hard to get financial
services in the future.
In England, “Individual Voluntary
Arrangements” involve you paying agreed amounts over 3-5 years. The
remaining debts are written off. This is an option to consider if
you are able to make sizeable payments.
- Debt Relief Orders
In England, this is a form of insolvency for
people with very low incomes and/or very few assets. Only an
accredited money adviser can apply for a DRO.
Remember that money advisers are the experts.
This following section is for anyone who would like a bit more
You need to deal with 'priority debts' first.
- Mortgage or rent arrears – can lead to the
loss of your home.
- Fuel arrears – can lead to your fuel supply
- Council tax arrears – in England, bailiffs can
take your possessions and if you have arrears after this, you can
be sent to prison. In Scotland, you can’t be imprisoned, but bank
accounts or wages can be arrested, or your possessions seized.
- Court fines – in England, if you don’t pay
magistrates’ court fines for traffic offences, bailiffs can take
your possessions, and you can be sent to prison. In Scotland, if
you don’t pay fines for criminal offences you can be sent to
- Arrears of maintenance – for ex-partners or
children (including Child Support Agency arrears), if you don’t pay
these, bailiffs can take your personal possessions. If, after this,
you still have arrears, you can be sent to prison. In Scotland, if
you don’t pay, you can ultimately be sent to prison.
- Income tax or VAT arrears – you can be sent to
prison for not paying your VAT or income tax. In Scotland, you
could have your bank account/wages arrested, sheriff officers
seizing your possessions, or you could be made bankrupt.
- Loans – if they are secured against your
- TV licence arrears – it is a criminal offence
to use a television without having a licence.
You can’t go to prison for not paying
non-priority debts. However, creditors may take you to court. If
you fail to follow a court’s order to pay these debts,
bailiffs/sheriff officers can seize your property. These
- Benefit overpayments
- Credit debts – overdrafts, loans, hire
purchase, credit card accounts and catalogues.
- Student loans
- Money borrowed from friends and family
- Parking penalties – in England this covers
local authority parking penalties. However, in Scotland it is
different. Fixed parking offences issued by criminal courts/local
authorities can lead to your bank account or other possessions
being seized if you don’t pay
Sources of help
Debtline: For free specialist advice. Tel: 0808 808
Debt Charity offering
free debt advice and free debt management. Tel: 0800
138 1111 or visit StepChange Debt
Remedy - their anonymous, online debt
Free debt management service and advice guides on budgeting and
alternative debt solutions. Tel: 0800 280 2816 or 0207 760
- Payplan: Free debt
management service. Tel: 0800 280 2816 or 0207 760 8980.
- Money made clear:
information about a range of financial issues, including the “debt
test”. The FSA will provide free, confidential online,
telephone and face-to-face support and advice. Consumer helpline
(including someone representing a consumer) 0845 606 1234.
- Rethink Advice Service: Tel:
0300 5000 927
NHS Stressline: practical information and advice from
trained health advisors.Tel: 0300 123 200.
Citizens Advice: Numbers for
your local service will be listed in the phone book.
Scotland: provides details of free and independent
Advice Northern Ireland:
network of independent advice agencies. Tel: 028 9064
StepChange Debt Charity: Online debt
counselling service. 0800 138 1111.
Royal College of Psychiatrists’
website: This gives tools, guidelines, links and
Dealing with debts
guide: National Debtline’s extensive and detailed
Advice: Providing independent advice on debt and other
MIND money pages: Web
resource written for people with experience of mental distress and
Resources including peer forum on mental
- Department for Trade and Industry (2005).
Tackling over-indebtedness. Annual Report. DWP: London
- NHS Information Centre for Health and Social Care (2009). Adult
psychiatric morbidity in England, 2007. NHS IC
- Jenkins, R. et al . Recession, debt and mental health. (2009)
Journal of Public Health
- Jenkins, R et al (2008). Debt, income and mental disorder in
the general population. Psychological Medicine, 38, 10:
- MIND. (2007). In the Red. Debt and Mental Health
- Money Advice Liaison Group (2007). Good Practice Guidelines.
Debt management and Debt collection in relation to people with
Mental Health Problems. MALG: London
- The text in this section is adapted from the Citizens Advice
online rights guide.
Many thanks to Chris Fitch for his support and
allowing me to use the booklet “What People Want Health and Social
Care Workers to Know and Do” (2009) (and to all the people who
collaborated in the writing of it). Also my thanks to those people
who allowed me to use their personal experiences as quotes. Sally
Series Editor: Dr Philip Timms
Main Author: Sally Dean
Editorial Board: Public Education Editorial Board
This leaflet reflects the best available evidence at the time of
© December 2012. Due for review: December
2014. Royal College of Psychiatrists. This factsheet may be
downloaded, printed out, photocopied and distributed free of charge
as long as the Royal College of Psychiatrists is properly credited
and no profit is gained from its use. Permission to reproduce it in
any other way must be obtained from the Head of Publications. The College
does not allow reposting of its factsheets on other sites, but
allows them to be linked to directly.
For a catalogue of public education materials or copies of our
The Royal College of Psychiatrists
21 Prescot Street, London E1 8BB
Tel: 020 7235 2351 x 2552
Charity registration number (England and Wales) 228636 and
in Scotland SC038369.
Please note that we are unable to offer advice on individual cases. Please see our
advice on getting help.
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