Tag: debt

Drowning In Debt: 4 Ways to Help You And Your Mental Health.

~ Eleanor Segall ~ Leave a comment

(image: Pixabay/Pexels)

Debt can quickly become overwhelming. What may have started as a single personal loan a few months ago, can quickly turn into multiple loans, credit card bills and rent/bills arrears. Eventually, you may reach a point when you’ve exhausted all borrowing options. At this point, it may seem like there’s no escape, however there is always a way out of debt – it may just be a case of seeking out professional debt help.

Additionally this can take a toll on your mental health- stress due to debt can cause insomnia, anxiety, depression and a host of ailments too. You may despair or wake up scared to carry on. You may fear the debt letters or emails and phone calls. The uncertainty is difficult for anyone.

There are four common ways to get out of heavy debt. You can learn more about these below.  

DMP

A DMP (debt management plan) is an agreement to continue paying off your debts, but at a reduced rate. If you cannot keep up with the current monthly debt repayments, a DMP could help lower these to make them more affordable. While you can negotiate debt payments with creditors yourself, choosing a DMP allows professionals to do the negotiating for you. 

DMPs do not cover priority debts (e.g. mortgage, council tax debt etc.) and are informal agreements that lenders can go back on at any time. They can also have a serious negative impact on your credit score. The benefit of these forms of debt relief is that almost anyone who is struggling with debt can apply for them and you will not be added to an insolvency register.

DRO

DRO stands for debt relief order. This is a legally binding order in which all of your debts are temporarily halted for a length of time (usually about a year). This period of time is known as a ‘moratorium period’ and is a chance to improve your financial circumstances. If after the moratorium period, you have tried to improve financial circumstances but not been successful, your debts will be written off. 

To apply for a DRO you must have debts no more than £30,000 and a disposable income of less than £75 per month. It is recommended for those that have assets less than £2000. Lenders must abide by a DRO, unlike a DMP. A DRO also applies to priority debts. Just be wary that you will be added to an insolvency register.

IVA

An individual voluntary agreement (IVA) is another option. It is similar to a DMP in that you continue to pay back your debts but at a reduced rate. Unlike a DMP, it is legally binding. IVAs typically last 5 to 6 years, after which any outstanding debt may be wiped.

IVAs are available to anyone with unsecured debts over £7000. Unlike a DRO, they are recommended for those with assets over £2000. Like a DRO, you will be added to an insolvency register. You can check out this site for more IVA advice. 

Bankruptcy

Bankruptcy is sometimes seen as the most extreme option and has a certain stigma around it, but there are times when it can be the best option. The bankruptcy period lasts 12 months – during this period, any non-essential assets you own and excess income you earn are used to pay off your debts. At the end of this period, you are discharged and any remaining debts are written off.

Bankruptcy is only an option for those with debts over £5000. You will be added to an insolvency register and you may find that you are not able to borrow any money for a certain period after. The advantage of bankruptcy is that all your debts are wiped after a year, making it quicker than IVA.

Whichever option you choose make sure you look after your mental health and wellbeing and get support from loved ones and those around you. This may include visiting your GP if you need too.

This article was written by a freelance writer and edited by Eleanor Segall.

Your Guide To Being Debt Free And With Good Mental Health in 2022

~ Eleanor Segall ~ Leave a comment
(image: Unsplash)

There is a strong correlation between debt and mental health which is often overlooked. According to the Royal College of Psychiatrists, 1 out of 2 adults with debts, also struggle from mental health and therefore it is something that certainly should be discussed more openly.

Not only can people with mental health such as anxiety or depression face difficulty with managing finances, but parallely, those with debt can often suffer anxiety or depression as a consequence. 

Debt can start with basic credit cards or types of personal loans and get out of control due to shopping online, gambling or by being unable to keep up by losing your job or form of income.

With 1 out of 10 Britons suffering with debt problems, circa 6 million people, it is something that we need to be more conscious about and today we offer some useful guidance and support to be debt free and have good mental health for 2022.

Speak To Your Creditors

The stress of having debt starts with the letters demanding payments and it is remarkable how such a small piece of paper can cause so much stress and anxiety. Also just the feeling of having debt in itself is a painful and uncomfortable feeling.

But one of the worst things you can do is avoid any communication with the creditor. In fact, just speaking to the creditor or company that you owe money to, can ease things. There are always options available to you if you are struggling to pay back a credit card or you are behind on a loan.

For instance, credit card companies can offer you a minimum payment, which is 10% of the balance and you can recur this each month until you want to pay in full. The fees for doing so are very, very small and there is just a tiny negative impact to your credit score – but it offers huge breathing space.

For lenders, they are likely going to be able to freeze interest, delay payment for several weeks and months or spread your repayments over a longer period of time, via something called an arrangement to pay. So whilst you will still owe the repayment, it will certainly help by being able to delay repayment until you can get back on your feet.

And just having some repayment schedule in place can stop any calls, texts or letters coming through the door and take some stress off your shoulders. 

(image: Unsplash: Towfiqu Barbhuiya).

Speak To a Professional 

If you are struggling with debt and are unsure where to turn, consider speaking to a debt professional. Not only are there lots of forums online, but there are charities who will answer you and help you for free, such as StepChange and Citizens Advice Bureau. These establishments will be very used to the types of debts and problems that you are having and they will know very quickly the best ways to calm things down and help limit any further fees and charges being applied.

Speak to Your Family and Friends

Whilst many people are too embarrassed to speak to their close circle of friends and family about their debt or their mental health, you will find enormous strength and support from the loved ones around you.

If you have some debts to pay off, you may find that borrowing money from family and friends can be a simple way to elevate this. It is common for parents to help with any debt problems and not request any interest back. You should always be planning on paying your family back though, because this is always healthy for a relationship. But certainly if you have lost your job and just need some breathing space, this can always be a viable option for you.

Don’t Be Shy to Ask For Help

Being strong in times of mental health or financial problems can sometimes add even greater stress, by just having to hold everything in or still be required to attend birthdays, pay for gifts or go to restaurants with people you love.

But being open and honest with the loved ones around you, can be one step closer to helping with your current problems and getting back on your feet.

Just Realise That Everything is Temporary

You might feel like your debt is taking over, but in reality, it may only be temporary. After all, debt is something that can be wiped out once you have repaid or part repaid.

You may want to avoid selling important things in your life, such as your house and your car, but do not be surprised how much junk is lying around the house that people are willing to pay money for. Whether it is books, CDs, DVDs or clothes, there are people on various apps, Facebook Marketplace or even car boot sales who are interested in buying these things and you could quickly gather a few hundred pounds in very little time.

You will be surprised how quickly you can get your debt sorted – and one step closer to financial freedom and better mental health.



This article was written by a freelance writer and contains links.

How Debt can have a huge impact on your Mental health by Ian Sims

~ Eleanor Segall ~ 1 Comment

debt1

(image: Money Under 30)

With the coronavirus outbreak, it is a worrying time for many of us financially. With that in mind, today we would like to share this about debt and mental health: 

Worries about money can hugely influence your overall wellbeing. A study conducted in 2019 showed that 9.5 million people in the UK have issues with their mental health, in direct relation to money woes, whilst a staggering 18 million worry about lack of money daily (source:N26).

How mental health impacts your finances

Research conducted by National Debtline indicates that approximately one in four adultswill experience an issue with their mental health within any given year. It is worth noting mental health incompasses a range of conditions and experiences, including:

● Anxiety

● Depression

● Bipolar disorder

● Phobias

● Schizophrenia

● Dementia

It is also worth highlighting that having a mental health issue or condition does not automatically mean you will struggle with finances or debt. However, it may make it harder to deal with. Research indicates that around half of all adults in the UK who are having debt problems also have a mental health issue (source: National Debtline).

It can causes a vicious cycle of problem health and finances

Unfortunately, feelings of stress, anxiety and even depression relating to growing fears about lack of money can lead to a vicious circle. It can impact your finance management abilities in a variety of ways. For example, serious anxiety or depression may cause you to lose energy or avoid your debt entirely. This may lead someone to avoid keeping up to date of their finances.

Problems with mental health could also affect finances if it means that it reaches a serious point where the person is required to take time off work. Depending on their individual circumstances (such as whether they are entitled to sick leave or not) this could mean a sharp reduction in their income. Unfortunately, this might have the unintended impact of making their mental health worse.

Other signs that debt is causing an impact on one’s health mentally include:

● Become overwhelmed or sick at the thought of the debt you are in

● Starting to withdraw completely from family and friends due to debt anxiety

● Symptoms of preexisting mental health conditions such as depression, are worsening

● Struggling to eat properly

● Struggling to sleep

● Regularly underperforming at work

What you can do if you are in debt and struggling with mental health

Do not suffer in silence, there are a number of places you can turn to that are confidential and free. This includes services such as the Samaritans or Mind. There are also debt charities dedicated to providing advice on how to get out of your debt, such as StepChange and National Debtline.

If you are looking to lower or consolidate your debts, you can look at debt management companies, but please note that they make take a fee for using their services

If you need help in the current crisis with getting Universal Credit or other welfare benefits for job loss or want to know more about managing your finances, check out the government and money websites such as MoneySavingExpert by Martin Lewis.

This blog was written by expert and freelance writer Ian Sims.

 

 

Guest Post: Mental Health and Money Worries: ‘The Perfect Storm’ by Consumer Money Worries

~ Eleanor Segall ~ 4 Comments

consumer1

When supporting clients with financial difficulties, not only is it essential we take in to consideration vulnerabilities for regulation purposes but CMW prides itself on the quality of care and diligence taken to support our clients. Mental Health and Money Worries is perfect for us and you- as we are here to ride the storm with our clients.

Our objective is to understand mental health problems and the impact on effective decision making; allowing us to support and signpost to the best of our ability. CMW aims to identify a sustainable pay and plan, ensuring we can positively contribute towards long term mental wellness.

Mental Health and Money Worries is the perfect storm

Mental Health presents unique challenges, this invisible illness can often be difficult to evaluate and understand for both ourselves and indeed the client!  When we support a client with Mental Health and Money Worries we need to understand… ‘1) Is it debt triggering the mental health issues. 2) Mental health issues triggering the debt. 3) Combination of both, fuelled by other factors – We recognise Mental Health and Money Worries go hand in hand.

It’s vital that we address these questions at the point of first contact with the client. We can then develop solutions to best meet their needs and take in to consideration any triggers and special considerations, such as working with a supporting carer.

Creating a Client Support Network to Weather the Storm

There are infinite reasons why a client may be facing mental health related money worries.

In some cases a client may not have previously suffered from or recognised mental health related symptoms or issues, such as anxiety, stress or depression. However, a build of debts and money worries over time may have brought on such issues. It’s therefore important we understand the debt related ‘triggers’ and support the client accordingly, for example they may have bailiffs knocking on the door or pressure from aggressive creditors. Our solutions must address these issues.

Conversely, a client may have built up debts due to time off or loss of work due to long term mental illness. Over time debts have built through no fault of their own.

Finally there is the co existing storm, where both money worries and mental health issues exist and are fuelled by other vulnerabilities and contributing factors such as gambling, alcohol/substance abuse and relationship problems.

All such factors can have significant negative impact on both mental health and debt level and therefore it is vital that our debt counselling solutions are delivered hand in hand with specialist organisations and charities whom can support a clients unique challenges.

 Educate, Inspire and Support – The Journey from Mental Illness to Mental Wellness

From first contact we focus on understanding the unique challenges and vulnerabilities of each client.

We partner with specialist mental health organisations and charities to create a support network for our clients that will provide the education, support and inspiration they need to address their money worries, mental health and vulnerabilities. Guiding them from Mental Illness to Mental Wellness.

Mental Health and Money Worries, riding the storm together!