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Mental health and debt – an unhealthy relationship

Debt comes in many shapes and sizes and can have a wide range of impacts on both the person in debt and their family and friends. While awareness of debt issues has risen, there is still a lack of understanding of how to deal with debt and where to seek advice. R3’s recent research found that people in debt are more likely to ask a friend than to turn to a professional advisor.

Mental health issues also come in many different forms, and can have a wide range of impacts on both the person themselves and their family and friends. Although the profile of mental health issues has risen, more needs to be done to ensure that no one feels they are alone and know where to seek help. Mental Health Awareness Week is a great opportunity to continue to share experiences of mental health issues and to promote where you can find help.

Most insolvency professionals come across people in debt who are also suffering mental health issues. Why is there a cross over between the two issues? In some respects it is a “catch 22”:

  • Debt can lead to stress and a feeling of a loss of control. Debt often comes hand in hand with triggers such as ill health, loss of job or income, or relationship breakdown. Debt and any one or more of these triggers can lead to new, or a recurrence of, mental health issues;
  • Ill health in any form can lead to debt. Ill health, including mental health, can reduce your earning capacity, let you take your “eye off the ball” and not deal with bills and paperwork, increase your outgoings, or any combination of those factors. If you are already in debt you may find yourself unable to service your financial obligations, and may see the amount you owe increase; or you may find yourself in debt for the first time, just when the last thing you need is another problem to tackle.

So debt and mental health issues often go hand in hand, as R3’s research with ComRes found – 1 in 4 British adults’ mental health is affected by personal finance concerns.

The need for ready access to advice is important, for both debt and mental health issues. R3 and its members are actively raising the profile of debt advice. Can we also raise the profile of mental health issues and the availability of such advice? Insolvency and debt advisors may not see themselves as being well placed to help, but that is not the case. Our experience of dealing with challenging scenarios and guiding our clients through complex options means that we have the listening skills and ability to identify the root cause of a debt problem. Furthermore, we will all have seen, at some point, debtors who have exhibited serious problems with managing their debts, so we will have seen in practice people suffering from serious stress and potentially mental health problems. We are, therefore, in a position to help.

Mental health and debt problems manifest themselves in a variety of ways, from the most complex to the relatively mild, where a few words of support and a nudge in the right direction may be all that is needed. Many times I have sat with a debtor and seen their body language change as the heavy burden of uncertainty has lifted as I have explained the options available to them. I hope that in my own small way that has helped to relieve the stress which may have been contributing to the milder mental health challenges faced by some of my clients. I am sure that experience is shared by those who are the first port of call from someone with the first signs of mental health problems.

I am also aware that some people have much more serious challenges and in no way suggest that a debt advisor should try to provide medical advice. The experiences noted above mean that we will from time to time recognise when someone is in need of such advice and we can signpost them to appropriate support.

Insolvency legislation (Rule 7.43 if you are interested) recognises the need to ensure that debtors and other parties affected by insolvencies can engage with the process. Where they cannot, and the person lacks capacity, there is an obligation on the insolvency practitioner to bring that to the attention of the Court and seek the appointment of a litigation friend to appear for, represent or act for that person.

It’s often vital for people with mental health issues to be supported by a litigation friend, who can represent and act for them, and it is frustrating when no one suitable can be found for this role. I hope we will all use Mental Health Awareness Week to learn more, so that we can better direct those in need to someone who can help them.

By Mark Sands, Chair of R3's Personal Insolvency Committee 

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.