Helping mental illness patients cope with debt

By Michael Lloyd

Debt and mental illness are not necessarily a package deal, but often a person struggling with one has the other. If you are close to someone with a diagnosed mental problem, knowing how to help them handle debt can make a huge difference in their lives.

One in four adults will suffer from a mental illness at some point in their life, and one in four people with mental illness struggles with debt, according to the Royal College of Psychiatrists.

Looked at another way, half of those in debt have a mental health problem, from mild depression or anxiety to more serious conditions such as schizophrenia. debt-mental-health

Some people with psychological ailments are able to access debt advice through a mental health caseworker or go directly to a debt charity themselves. Others, however, feel unable to tackle their finances, or simply choose to ignore them. If you're concerned that somebody you know with mental health problems may also be having trouble coping with finances, your intervention could help them turn things around.

Spot the signs
Before offering help, look for signs that your friend or loved one might be struggling with debt. Raising the subject of finances could be stressful for the individual concerned, or just outright overstepping your boundaries, so you'll want to make sure you have a good reason for doing so.

A change in mood or behaviour could be one sign. "Each person may deal with money worries in different ways; some people are stressed by their money problems, and irritability can be a sign of this, as can eating or sleeping poorly," Stephen Buckley, head of information at mental health charity Mind, said in an emailed response to questions. "Others become depressed, tearful, low on energy or withdrawn."

Another sign: growing piles of unopened bills or threatening letters from creditors.  "Having a mental illness can make it very hard to keep on top of day-to-day financial affairs, such as dealing with bills and direct debits," Brian Semple, news and media manager at Rethink Mental Illness, said in his emailed response to questions.

Medication may also contribute to a person's inability to keep their finances in order, Semple said. For instance, antipsychotics can leave patients feeling confused or affect memory.

Before offering help, look for signs that a person with mental health issues might be struggling with debt. Raising the subject of finances could be stressful for the individual concerned, or just outright overstepping your boundaries, so you'll want to make sure you have a good reason for doing so.

A change in job status could also signal trouble. "If someone becomes unwell suddenly and loses employment as a result, that will obviously result in a drop in income which can lead to serious financial difficulties," said Semple. "If their mental health fluctuates, their income may also fluctuate which can make it very hard to budget and pay bills on time."

How you can help
If it's simply a question of money management, most creditors will be happy to speak to you on behalf of your unwell friend or relative. You'll typically be able to do this over the phone as long as you have the account holder with you to grant verbal permission.

If you want to speak to a creditor on an ongoing basis, the account holder will usually need to send a letter of authority. Setting up this sort of arrangement will allow you to make sure payments are made regularly and on time.

However, it won't always be so easy. "Some organisations have different policies for dealing with third parties, and won't always accept a general letter of authority," Semple said. "If this is the case, you should ask the organisation for a ‘third party mandate form', which will allow you to operate your relative's account in the same way as a letter of authority."

Things will be even more complicated if you feel your friend or relative is -- or might become -- so unwell that they're unable to make sensible financial decisions for themselves. Under these circumstances, you'll have two options.

"If your relative is able to make decisions for themselves at the moment but is concerned that they may lack the ability in the future, they could grant you ‘Lasting Power of Attorney'," said Semple. "This could be useful if, for example, your relative has bipolar disorder and is worried that when they become unwell they might spend more than they can afford.

"If you think your relative has become so unwell that they don't have the ability to make financial decisions, you can apply to the Court of Protection to become their Deputy, which gives you the authority to make decisions on behalf of your relative," he said.

Last resort: debt write-off
Under some circumstances, you may be able to have the debt of a mentally ill person written off. The Money Advice Liason Group's good practice guidelines recommend that debt owed by a person suffering from a mental illness should be written off as a "last resort" when their condition is long-term and unlikely to improve, or when they have no "disposable income, no significant available assets and an insolvency remedy is not an appropriate option".

Getting a mentally ill person's debt written off won't be easy, though. You'll need to supply the creditor in question with evidence that demonstrates the severity of your friend or relative's condition and prove that they do not have the disposable income to pay back what they owe.

"If this applies to someone you know, the best thing to do is to help them to write a letter to their creditors, asking them write off the debt," Semple said. "It can be helpful to include supportive evidence from their [general practitioner] or psychiatrists. The letter should explain how long the person affected has been unwell, what their mental health was like when they entered into the financial agreement, any recent changes of circumstance which will make it hard to repay the debt and details of how the debt is impacting on someone's mental health."

Where to turn for more help
If you're struggling to negotiate with a mentally unwell friend or relative's creditors, contact a free debt advice service such as StepChange, PayPlan or Citizens Advice for help. All three organisations provide support for people suffering from mental health issues. A free debt advice service may be able to negotiate with creditors on your friend or relative's behalf and take over the management of accounts. You can also try a mental health charity, such as Mind.

If the person you're trying to help feels uncomfortable speaking with a debt counsellor, offer to sit in on counselling sessions or to speak on the phone with a counsellor on his or her behalf. Debt counsellors are typically trained in how to help people suffering from mental health problems, so they should be mindful of your friend or relative's condition.

See related: Can credit card debt make you sick?, 4 things not to say to a loved one in debt

Published: 20 May 2015