Mental Health and Debt: The Benefits of a Caring Approach

Posted: 12th Oct 2015

By Rory McGimpsey

According to The Royal College of Psychiatrists, one in four people with a mental health problem are also in debt. It is a symbiotic relationship: mental health problems can trigger debt issues, and debt issues can lead to an assortment of mental health difficulties.

Debt and money worries can precipitate a range of negative emotions, including, but not limited to: helplessness, embarrassment, despair, guilt, fear, loneliness and anxiety. Whether or not these feelings are justified is irrelevant. An individual in debt will often perceive their financial problems in a negative manner, and this can have acute consequences for their emotional wellbeing.

This is borne out by our own “Psychology of Debt” research that discusses the correlation between indebtedness and emotional distress. In particular, the research highlights lack of employment as a significant factor in the triggering of debt problems and related psychological conditions. It states “Unemployment (and the fear of unemployment) has particularly damaging effects on mental and physical wellbeing as well as financial problems.” The problem has been exacerbated by the financial crisis of recent years, where a common over-reliance on credit has created increased indebtedness for millions of people all over the world.

The suggestion is clear: loss of social status and/or economic position can have a profound effect on individuals and their mental health. It is evident that external factors can precipitate mental health problems in many individuals from a variety of backgrounds, which in turn impacts their ability to manage their finances in a healthy and stable way. We see this every day in the money advice sector. Unexpected events that happen in all our lives can take a severe emotional toll. The list is not exhaustive, but relationship breakdowns, businesses collapsing, physical health problems, and substance/gambling addiction can all lead debtors into a spiral of unhappiness that can be overwhelming.

Mental illness is not only a prime cause of debt issues, but mental health conditions can also impact an individual’s ability to tackle a money problem when it arises. For example, the mental health organisation Mind testifies that an individual with a mental health problem is more likely to ignore creditors in the hope that the letters and phone calls will simply go away. Burying their head in the sand only compounds the debt problem, and the client becomes locked in a stressful cycle that they are unable to control.

An individual in distress may also be deterred from seeking the help they need due to feelings of shame, or that an advisor will react to their concerns in a judgemental way. The Mental Health Foundation reveals “Much of debt-related anxiety can be due to a lack of support from creditors and from the individual’s surrounding family, friends, and employers. Debt can be a considerable burden, made worse by dealing with it alone.”

This is vitally important for money advisors. It is clear that just as debt can cause or compound mental health issues, conversely debt resolution can profoundly improve clients’ lives for the better. As Stepchange puts it: “Stress can cause a person to get into debt, and debt can cause immense stress. We’ve seen so many people locked into this vicious circle. But it’s our belief that by tackling one, we can alleviate the other.”

This, in turn, can be a challenge for money advisors in terms of treating clients with the empathy and compassion they deserve. Research was carried out by Money Advice Trust, in conjunction with the Royal College of Psychiatrists in 2009, where a survey was completed of creditors’ staff and other individuals working in the money advice industry. The survey produced some interesting results. Money Advice Trust’s website informs us that “The findings of the research were startling. Creditors’ staff told us that mental health is the most difficult issue to deal with, over any other customer issue, and almost half find it difficult to discuss customers’ problems, because they simply feel they don’t know enough.”

Knowledge and a caring attitude on behalf of advisors can go a long way to solving the problem, however. I encounter these challenges every day in my own job as a variations advisor. In the last year alone, I’ve provided debt advice to clients with conditions such as severe depression, bipolar disorder, and extreme anxiety. I’ve also dealt with clients who have openly described themselves as suicidal. The safeTALK training undertaken by Aperture staff in the last year is an excellent example of an educational tool that has empowered advisors to deal with these issues in a much more confident fashion. This training provided useful tips on identifying clients at risk and connecting them with resources/assistance if needed. This training has helped advisors to identify clients at risk of suicide and respond urgently.

In the last year, we have seen several examples of clients in extreme distress. In all cases, though, a helping hand goes a long way. My own experience supports these findings, namely that clients are looking for someone to help them find a way out of debt in a caring, non-judgmental way. Empathy is the key to breaking down barriers and finding mutually beneficial outcomes. One of the most common responses I get from clients explaining their debt problem to me is “You’re the first person to have really listened.” As “Psychology of Debt” concludes, advisors can help clients understand that they’re not alone, and there really is light at the end of the tunnel. Debt and mental health can be complex issues, but experience tells us that an empathetic and caring approach can empower advisors to really transform the lives of their clients.



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