How illness and vulnerability can lead to debt

People with a vulnerability such as a long-term illness, disability, or mental health issue are more likely to struggle with problem debt, according to Step Change Debt Charity.

StepChange says that around 1 in 5 of its client’s debts were classed as vulnerable and over two thirds of those vulnerable clients were receiving benefits, compared with half of those clients without a vulnerability. 

Vulnerable clients were more likely than other clients to be in arrears on household bills such as rent, utilities, or council tax.

Who is financially vulnerable?

The causes of financial vulnerability could be long term, or they could be the result of a temporary change in circumstances.

StepChange says the most common causes of vulnerability are:

  • A recent bereavement

  • Mental health problems

  • Long-term or terminal illness

  • Dementia or brain injury

  • Difficulty in communicating, for example reading or speaking on the phone

  • Learning disability

  • Relationship breakdown

  • Addiction

There may be other reasons why someone is vulnerable. But anyone who finds it especially hard to deal with their debts because of their situation or their health could be considered vulnerable.

What help is available if I am financially vulnerable?

Many creditors and debt collection agencies have teams to help vulnerable customers. 

Staff are trained to help agree different ways to deal with cases and will be more sympathetic if you need a payment break. They may also communicate with you differently.

Getting help can reduce the stress and worry of problem debts and can make a big difference to helping vulnerable people cope with other issues.

How can I help a vulnerable person in debt?

StepChange says the two most important things you can do to help a vulnerable person in debt is to:

1. Speak to a debt charity or counselling service

Help put them in touch with a debt charity such as StepChange, they may also be able to contact Citizens Advice. StepChange has an online debt advice tool which can help work out where they stand with their debts.

2. Help them contact creditors

Help them to get in touch with anyone they owe money to. If you can act on their behalf with their permission, you can let the creditors know they are vulnerable. Without knowing this, creditors cannot help.

Other things you can do to help someone vulnerable in debt

  • Help them read through paperwork

  • Help them get important information together

  • Help them list their debts and what they owe

  • Help them make a note of account numbers 

Building financial resilience

The Money Advice Service estimates that 8.3m people in the UK are over-indebted, and that 22% of UK adults have less than £100 in savings.

These people are more likely to experience a financial shock and fall into the vulnerable category if they did experience an illness or change in circumstance.

The important thing is to be aware of any triggers or personal circumstances that could put you or someone you know at risk of becoming financially vulnerable.

Mental health and debt

If you know that your mental health condition is contributing to your financial difficulties, you can discuss this with your bank.

Under the Lending Code, which banks must adhere to, any mental health information you tell your bank should only be recorded with the account holder’s consent.

If, for example, you have bipolar disorder and there are times when you are more likely to overspend or sign up for extra credit cards, you can ask your bank to add a note to your file.

You could ask your credit card company to contact you if they spot unusual or large purchases. You could also ask them to put a cap on what you can spend to help you manage impulse spending.

Sudden illness and debt

Being diagnosed with a serious illness can have a devastating effect on your finances. You may need to take time off for treatment and recovery from surgery or adapt your home to help you cope with your new condition.

Cancer charities have lots of information on managing your finances. Macmillan Cancer Support says the financial impact of having cancer means the majority of cancer patients are £570 a month worse off.

It is working with the government and other charities to make it a legal obligation for banks to have a duty of care for vulnerable customers, such as people living with the disease, before they reach crisis point.

This could include flexibility on mortgage payments, interest freezes on credit cards and loans or ensuring customers are signposted to financial help as early as possible.

Poor health and disability

If you are living with a long-term health condition, or are disabled, you may also need help managing your finances now and for the future.

Budgeting and debt advice from charities can help you adjust to different financial circumstances. You don’t need to wait until you are in debt before you contact a counsellor. 

Seeking help before things get to crisis point is a much better option and early intervention can be invaluable in helping to sort things out.

The Money Advice Service, which has been set up by the government to provide independent money advice, says it is “never too early or too late to seek advice”.

If you are not in debt, but need help with your finances, you can ask a Money Adviser to give an overview of your money situation and provide helpful suggestions.

If they think you need more specialist help they can then refer you on to a debt adviser, or someone who can help you with benefit applications.

Debt and vulnerability – resources to help

Support with mental health and debt 

The MoneySavingExpert guide to Debt and Mental Health is a free 44-page PDF booklet supported by Mind, Rethink, CAPUK and others, for people with mental health problems and those caring for them. 

The Royal College of Psychiatrists has a short animated film about Bipolar Disorder and how it can affect you.

Mind also has advice on its website for those struggling with debt and depression 

You could also seek support from your GP, case worker, consultant, psychiatrist, friend or family member. Alternatively, call the Samaritans on 116 123.

StepChange can provide extra support to vulnerable people: visit the website or call them on 0800 138 1111.

Support with illness and debt

Macmillan Cancer Support has a useful budgeting guide. It also explains how to check whether you are eligible for benefits.

Citizens Advice staff get specialist training on how to deal with clients with mental health problem. Visit or your local Citizens Advice Bureau.

The Money Advice Service provides money guidance online and over the phone and can be contacted on 0800 138 7777, Monday to Friday 8am to 6pm and Saturdays 9am to 1pm. Information and guidance is also available on their website or via a webchat.

“Breaking the link: a closer look at vulnerable people in debt” is available on the StepChange Debt Charity website.

Coronavirus and debt

Step Change has a coronavirus information hub for those who are struggling with debt as a result of the pandemic and a guide to help people manage their finances on a reduced income.

16 December 2020