By 
MoneySavingExpert.com founder Martin Lewis has set up the new Money and Mental Health Policy Institute, funded with a pledged £2.1 m donation over four years. Here he writes exclusively to explain why
Debt and mental illness: a marriage made in hell
1. You are four-to-six times more likely to have debt crisis if you have mental health issues. 2. Half of those seeking debt help have mental health issues. 3. The treatment time for clinical depression can be 18 months longer for those with financial problems too.
The two feed off each other. Debt crisis can trigger clinical depression, anxiety attacks and more; mental illness can build debts. Breaking the link would help individuals, the NHS and the economy.
Yet many who admit to me they’re affected by this union think they’re alone.
Actually it’s so common it’s ordinary. Mental health is a spectrum. Everything from borderline personality disorder to dementia or just plain grief. All can affect our ability to make decisions.
My hope is that within a decade when someone is getting a credit card, if they choose to mention they have, say, bipolar spending sprees, without fuss the bank simply says: “We’ve a number of different control options you may like.”
While I don’t have a clinical condition, like millions across Britain, I’ve had some very dark days. During one of the worst of those, where I struggled to cope with leaving the house, I felt so fortunate that I wasn’t paid by the hour, struggling to make ends meet, and could take a little recovery time.
That was the day I promised myself to try to do something for those without that luxury.
This is more than a financial issue
The debt counselling agency CAPUK says 31pc of its clients have considered suicide and 5pc have attempted it.
When I’ve written about it on social media I’ve been swamped by the responses. Here are just a couple:
- “I have bipolar and was given lots of credit, which I spent while on a manic high. I am now in so much debt there’s no way out. Money worries continue to hamper my recovery.”
- “I’ve been in the circle of hell for 20 years. The illness makes dealing with it difficult. Talking to aggressive strangers only interested in being paid becomes too much so you avoid it and the debt doubles with interest or fines. You stop opening post so they knock at the door, so you stop answering the door. Next thing you are a prisoner in your own home. One period of illness leaves financial scars with you every day.”
Helping people when they’re in control to protect themselves when they’re out of control
Thankfully over the past decade, the financial services sector has improved its attitude and procedures when dealing with people with mental illness once they’re already in the mire.
So the new Money and Mental Health Policy Institute’s focus is prevention. It isn’t a think tank – I don’t give a monkey’s about research for research’s sake. The aim is to invent practical solutions and then get practical change.
It’ll be run by the brilliant Polly Mackenzie, a former policy chief and No 10 special adviser, and a team of policy and academic researchers.
Unapologetically, we’ll start with low-hanging fruit to prove our worth – like the following two ideas. Both are based on controls you can put in place to protect you from fraud, but used to protect yourself from yourself. This should help not only individuals but lenders too because if it prevents bad debt, they gain.
High control account options
Go abroad and debit and credit card firms freeze your accounts if they detect unusual spending patterns. Why not allow people to voluntarily apply that to all spending?
Then if unusual spending patterns happen, their card is frozen for a set time, say 10 weeks, unless a nominated trusted friend or mental health case worker agrees it should be unfrozen, because the high spend is, for example, just due to a house move.
While particularly powerful for those with depression or bipolar-triggered spending sprees, anyone should be able to use it. As former No 10 head of policy Paul Kirby (one of our trustees) said: “Don’t add the stigma of calling it a mental health protection; instead, just call it a high control option.”
Yet there are challenges to making it happen – not least that “trusted person status” doesn’t exist in regulations (not without the huge rigmarole of a lasting power of attorney).
Credit freeze
This would allow people to choose to lock their credit file so they can’t apply for any new credit.
Unlocking would take a set time – say 30 or 90 days (research is needed), enforcing breathing space to allow things to calm down before you’re locked in to debt. Of course, better and quicker treatment times would help, too.
After all, if someone breaks their leg, within a few hours they’re in hospital. They may lose some income, but quickly things get back to normal. Yet someone who has a mental health breakdown can wait 16 weeks for an appointment.
Meanwhile, they may lose their job as they’re not able to cope with telling work why they’re absent; and, as mental health hits your decision-making ability, many people simply don’t deal with their finances. After 16 weeks, this can have a catastrophic financial impact, irrecoverable for years.
How to manage: top 10 tips
No debt crisis is unsolvable. It may not be easy or quick, but it’s always doable. Of course mental illness can make it all far harder. However, there are things you can do.
I’ve a 44-page Mental Health & Debt e-book at mse.me/mentalhealth; here are some tips from it.
1. Speak to a non-profit debt help agency. If you’re in debt crisis, citizensadvice.org.uk, stepchange.org, nationaldebtline.org and especially capuk.org can help – I say especially as it also offers emotional counselling.
2. Consider informing your bank of your illness. If lenders know of mental health conditions, they must make adjustments, such as keeping debt in-house rather than passing it to debt collectors, and making court action the last resort. Plus it can’t then discriminate against you by refusing you other products, as that breaches the Equality Act. Discuss with your case worker or debt counsellor if you decide to tell your bank.
3. Can you cut the interest rate? The lower it is the more of your repayments clear the actual debt. A balance transfer credit card can shift debt to 0pc for 40 months.
4. Know the early warning signs. Even when people plunge into debt, issues like depression don’t bite overnight. Look out for tension headaches, arguments at work, back pain or bad skin.
5. Banking control with bipolar. A few banks let you register to stop your overdraft going beyond a certain amount. If not consider a basic bank account, which doesn’t have an overdraft facility.
6. You can add a note to your credit file. You can volunteer to add information on mental health problems in what’s called a “notice of correction”. This alerts potential lenders so they don’t lend further credit. You can remove it when you want.
7. Consider paying bills by direct debit. This can simplify your finances, helping to ensure bills get paid when you’re ill.
8. Prioritise heating and eating. Don’t simply pay those who hassle you the hardest. Debt counsellors can help.
9. Ask a friend to help. When you don’t trust your own judgment, ask someone you trust to help you work out financial actions. And see if your employer can reduce your workload temporarily.
10. Changing your mind online. If you impulse-buy online you have a right to cancel the goods within 14 days after delivery.
Who’s who: the new institute
- Founding & Funding: Martin Lewis, with a pledged £2.1m donation over four years.
- Director: Polly Mackenzie, former head of policy for Lib Dems, No 10 special adviser focusing on consumer issues and mental health.
- Staffing: six research-focused staff to be appointed in year one.
- Trustees: chaired by Martin Lewis, also including Richard Lloyd of Which?, Paul Kirby, former head of No 10 policy unit; and Simi Ryatt of Citizens Advice.
- Advisory Board: includes Luciana Berger MP (shadow mental health minister), Norman Lamb MP (Lib Dem mental health spokesman), Conservative MP Johnny Mercer, Prof Sharon Collard (OU).
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