How to deal with debt and mental health

Money worries can have a serious impact on our mental and physical wellbeing. Find out how you can get help with financial problems, including through the government’s new Debt Respite Scheme (Breathing Space).

Largely due to the coronavirus pandemic, many people are now worse off than they were this time last year. Add to this worries caused by social distancing, lockdown, home schooling and the loss of loved ones and it comes as no surprise that the mental health charity Mind has said that we’re in a mental health emergency.

Citizens Advice has reported that 1 in 3 households have lost income because of coronavirus and 7.3 million UK adults are behind on bills. And in a recent survey, StepChange – the UK’s most comprehensive debt advice service – found that the number of people who have fallen into arrears or borrowed to make ends meet had increased by one million to 5.6 million.

Debt and mental health

Money and our wellbeing often go hand in hand.

How we feel and our mood can affect how we act, how we spend money and what we spend our money on. Feeling low or depressed can make it difficult to manage money and cause people to adopt poor spending habits and make poor financial decisions, like buying things to improve the way they are feeling.

This can create a cycle of financial problems and poor mental health. As debts build up, they become the problem, causing depression and anxiety, impacting on relationships and work, and causing poor mental wellbeing.

The financial impacts of coronavirus

Coronavirus has had a huge impact on our lives in so many ways. Unfortunately, for many people, the pandemic and lockdowns that have come with it have led to income shocks.

For some people, this was because they were furloughed, put on reduced hours, or made redundant. For others, it was because they needed to shield, or care for loved ones.

A personal debt crisis is now emerging and 1 in 6 people behind on household bills have been unable to afford food during the pandemic.

Between April and October 2020, StepChange provided free debt advice to over 95,000 people. Many were struggling with household bills and the proportion of people in council tax arrears jumped from 20% to 29%. Those in rent arrears increased from 17% to 20%.

Unfortunately, many people who’ve experienced severe financial difficulty because of coronavirus are from groups already identified as being vulnerable to problem debt before the pandemic. For example, 50% of people on zero-hour contracts and 30% of people with children under six were behind on their bills.

Debt Respite Scheme (Breathing Space)

One way you may be able to get help, particularly if you’re having mental health issues, is through the government’s new Debt Respite Scheme (Breathing Space).

From 4 May 2021, this scheme will give anyone in problem debt the right to legal protections from their creditors.

A standard breathing space is available to anyone with problem debt. It will protect against creditor action for up to 60 days. The protections include pausing most enforcement action and contact from creditors, and freezing most interest and charges on debts.

In addition, people receiving treatment for a serious mental health crisis will receive the same protections until their treatment is complete, plus a further 30 days.

In each case, professional debt advice will be provided so people can understand the options available to get out of problem debt.

How to find help

If you have money worries, the best thing to do is take control of the situation and tackle problem debts and money worries. One place you can find practical tips to help manage your money and improve your mental wellbeing is on the website of the mental health charity, Mind.

There’s also lots of free, confidential and impartial advice that can be found online or by phone, including self-help tools or talking through issues with expert advisers.

If you, or someone you know, needs support on how to manage finances or debts, you can get free support and guidance from Citizens Advice, as well as from our partner organisation, StepChange.

You can also contact our own Guideline team and they’ll help you find specialist guidance.

In 2020, we referred more than 3,300 residents for free, expert debt advice. This led to £11.3m of debt being written off for these people.

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