Facing a terminal illness can be incredibly challenging, both emotionally and physically. And for many, the addition of financial stress, in particular debt, can feel overwhelming.
This article offers practical advice on managing debt during this difficult time, helping you to take control of your financial situation, and ensuring peace of mind for both yourself and your loved ones.
What is a terminal illness?
A terminal illness is a disease or condition that is ultimately expected to result in the death of the patient. Typically, when someone is diagnosed with a terminal illness, their life expectancy is often limited to a few months or years. A few common examples include advanced stages of cancer, motor neurone disease, and certain heart conditions.
For financial institutions and creditors, a terminal illness usually means a certified diagnosis by a medical professional that indicates a limited life expectancy. It’s important to understand this definition because it forms the basis for various financial considerations and potential debt relief options.
When diagnosed, the focus often shifts towards managing day-to-day symptoms and preparing for end-of-life care, which can ultimately make financial matters feel overwhelming.
Can debts be written off due to terminal illness?
Typically, debts are not automatically written off due to a terminal illness. However, while there is no legal requirement for creditors to write off debt in these circumstances, they may offer support or make concessions. Each case is considered individually, meaning the outcome can vary.
For more detailed information on how debt is handled after death, see What Happens to Debt When You Die.
How to get finances in order
Below, we’ve listed some strategies to help you take control of your finances. Implementing these tips may significantly reduce stress and bring you peace of mind, especially during challenging times.
Inform any creditors
It’s important to inform your creditors about your diagnosis as soon as possible. Many creditors have policies in place to help support customers who are facing severe health issues, which may include reduced payments or in some cases, writing off the debt.
When contacting your creditors, make sure you have all of the relevant documentation, such as a letter from your doctor to support your situation. Open and honest communication could lead to more favourable terms and reduce the financial stress on you and your loved ones.
Claim everything you’re entitled to
Make sure you claim all of the benefits and financial support you are entitled to. This includes financial help from Government benefits, grants, or support from charities. Below, you’ll find a list of benefits and grants you could be entitled to:
Benefits:
- Personal Independence Payment (PIP): If you have a long-term physical or mental health condition or disability or you experience difficulty doing certain everyday tasks, you may be eligible for PIP
- Employment and Support Allowance (ESA): If you have a disability or health condition that affects how often you can work, you may be eligible for ESA. You can apply if you’re employed, self-employed or unemployed
- Universal Credit: If you’re on a low income or need help with your living costs due to being out of work or unable to work due to a health condition, you may qualify for Universal Credit
Grants:
- Macmillan Grants: If you’re 18 and over and have a current cancer diagnosis, you’re eligible to apply for a £200 Macmillan Grant to help with the cost of energy bills, home adaptations and the cost of travel to and from the hospital
- Turn2Us: To see which grants you could be eligible for, see the Turn2Us Grants Search. You’ll just need to take a few minutes to answer some questions and they’ll be able to match your information to grants that you may be able to apply for.
It’s worth getting advice from a financial advisor or social worker to make sure you’re maximising your entitlements.
Create a Will and put Power of Attorney in place if needed
Creating a Will is crucial to ensure that your wishes are followed after your death. A Will allows you to specify how your assets should be distributed, who will care for any dependents, and any other wishes you may have.
Additionally, by designating someone you trust to become the Power of Attorney, this enables them to be able to make decisions on your behalf if you are unable to do so. This can include managing your finances to make sure your affairs are in order.
Many charities offer free will-writing by solicitors. It’s important to note that in return, they hope you’ll make a donation in your will (though, this isn’t mandatory). There are also a few charity events that take place throughout the year such as Free Wills Month in March and October, allowing those aged 55 and over to get a free solicitor-drafted will.
Put money aside for your funeral
Funeral costs can be a significant burden on your loved ones. By planning and putting money aside for your funeral expenses, you can make things easier. Some people choose to take out a pre-paid funeral plan, which lets you pay for your funeral in advance at today’s prices, protecting against future cost increases. This preparation ensures that your family is less likely to face financial stress during a time that is already difficult.
Clear any remaining debt
Although most debts aren’t passed on to family members after death, it’s still important to clear as much of your remaining debt as possible. Consider using debt management solutions such as a Debt Management Plan (DMP), which can help you manage and pay off your debts in a structured way. A DMP can consolidate your debts into a single monthly payment, making it easier to manage and potentially reducing the overall amount owed.
If a loved one is terminally ill and you’re wondering if you could be responsible for their debt, see Can You Be Responsible for Someone Else’s Debt.
