Is there a link between personal debt and mental health?

November 8, 2016

Problem debt does not happen overnight. What may start as a niggling worry over how you are going to meet your next monthly payment, can quickly escalate into sleepless nights, and unfortunately for some, an eventual spiral into ill-health as your debt snowballs out of control.

The reason for this is that problem debt affects all aspects of your life, not just your bank balance. When you are struggling with debt it takes its toll on your relationships with friends and family, your performance at work, and even your mental health. Unfortunately problem debt and mental illness are two issues which often go hand in hand.

Some people fall into debt because of their existing mental health problems; others suffer mental health problems as a direct result of their problem debt. Regardless of whether the debt or illness came first, dealing with both issues together is a potentially toxic mix and can create a vicious cycle from which it can seem impossible to escape. The cycle goes as follows:

  • You struggle to meet the minimum payments on your existing debts
  • As a result you take out more debt in order to pay the original debts
  • However by taking on more debt your minimum payments increase
  • The stress of seeing your debt rising makes your illness worse
  • You relieve stress by buying something to make you happy – this then leads to more debt being added

If you believe your problem debt is affecting your mental health, you may feel as though you are completely alone, however this is far from a unique situation to be in. In fact a study conducted by revealed that people suffering from mental health problems are almost five times more likely to have severe debts compared to the rest of the population. The poll of 6,700 people, showed that 44% of those who’ve had mental health problems (or have partners who do) have had severe or crisis debts, this is in comparison to just 9% of those without a mental illness who have experienced severe debt.

Here are 5 things that may be able to help if you are suffering:

  1. If you’re in debt crisis, consider speaking to one of the not for profit debt agencies such as Citizens Advice, StepChange and National Debt Line who can help provide you with practical advice for dealing with your debt. Christians Against Poverty ( are an organisation that are particularly helpful for those with mental illness as they not only offer advice about debt matters, they also offer emotional counselling.
  2. Consider informing your bank of your illness. If lenders know of that you have a mental health condition, they are required to make adjustments to how they treat you. This may include keeping debt in-house rather than passing it to debt collectors, making court action a very last resort.
  3. Are you getting all the money you are entitled to? Anyone over the age of 16 who has a diagnosed mental health problem may be entitled to a Personal Independence Payment (PIP). This payment isn’t means-tested, so even if you work, you could still get it. The amount offered varies depending on the severity of your illness.
  4. You can voluntarily add information to your credit file which explains your mental health problems. This is called a “notice of correction” and will be seen by lenders every time you apply for credit. If your illness means you have periods where you apply for lots of credit and are more likely to spend recklessly, such as bi-polar disorder, a notice of correction could be a way of stopping creditors lending further money to you. It is entirely voluntary you can remove this information whenever you want.
  5. Ask a trusted friend or family member to help if you feel ready. Whether you ask for help dealing with your finances, your health or just letting them know the situation, you often feel better after getting it off your chest. You could also consider telling your employer as they may be open to temporarily reducing your workload until you are feeling better.

Unfortunately debt is often something we don’t talk about until it reaches a crisis point. We struggle on as long as we can, perhaps ashamed or embarrassed about the situation we have got ourselves into until it eventually gets to a point where we can’t hide it any longer. However the sooner you talk about it, the sooner you can start putting together a plan of action and begin to see the light at the end of the tunnel. No matter what your situation is, the good news is that debt problems are solvable. It may take time to sort out and involve you making sacrifices along the way, but it can be done.

John Baird

Insolvency Adviser

Tel: 0800 063 9250

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