Juggling your financial responsibilities can often be an overwhelming task. From credit card bills and mortgage payments to student loan repayments and utility bills, different types of debt can start to build all too easily. This can cause stress and anxiety for even the most mentally resolute among us, never mind those living with mental health conditions or a diagnosed mental illness. So, the question is, what support is available to you if you’re living with mental illness that is exacerbated by financial trouble?
In this guide, we’ll examine the relationship between debt and mental health to explore the direct impact debt can have on an individual’s mental health and outline the different forms of relief and respite that may be available to you. This includes explaining how the Debt and Mental Health Evidence Form (DMHEF) works.
How debt affects mental health
For many people, credit is an inescapable reality of modern life. Unfortunately, wherever there’s credit, there’s debt. This is where personal finances and mental health concerns tend to intersect.
According to a recent Money and Mental Health survey, 86% of people believe their financial situation has, at some point in their lives, made their mental health worse. This is a very worrying statistic given that, according to the charity Debt Justice, an estimated 10 million people were ‘heavily in debt’ in the UK as of April 2023.
As the cost of living continues to rise, for many, the impact of debt on mental health goes way beyond occasional feelings of stress or worry. The fact is, the constant pressure to meet financial obligations can lead to not only stress and anxiety, but also the development or exacerbation of chronic mental health conditions.
Can debt be written off due to mental health?
As a rule, a creditor is not likely to write off debt due solely to the mental health conditions a debtor is facing. This is because, in the UK, debts are legally defined as contractual obligations that are difficult to break without legal intervention. That being said, there are legal frameworks in place in the UK designed to help those dealing with poor mental health and significant debt.
One of these is the Debt Respite Scheme (Breathing Space), introduced in 2021. Under this scheme, individuals receiving mental health crisis treatment are granted temporary relief from enforcement action and interest charges for as long as they are receiving treatment (regardless of treatment length), plus a further 30 days once treatment has ended. Although this scheme is designed to provide respite and not to write off debt, for many it can act as the first step to regaining control over their finances. This might be just through the gift of additional time or as a gateway to professional debt management solutions such as Individual Voluntary Arrangements (IVAs), Debt Management Plans (DMPs), or Debt Relief Orders (DROs).
Total debt write-off remains rare, however. In the limited number of scenarios where this is an option, a complex process involving both legal and financial consultation is required.
Fundamental to the success of these processes is the Debt and Mental Health Evidence Form (DMHEF).
What is a Debt and Mental Health Evidence Form?
Put simply, the DMHEF is a document from your doctor or health professional that is designed to help your creditors understand any mental health conditions you may be experiencing. Naturally, this means this form can play a crucial role in establishing the connection between an individual’s mental health condition and their financial circumstances.
While it’s important to understand that the DMHEF isn’t a direct mechanism for debt write-off, it certainly can be used as a tool that can lead to better relations between you and your creditors. Simply by presenting this form – containing evidence from a third-party health professional – a dialogue between you and your creditors can be opened that may ultimately lead to them taking a more compassionate and supportive approach to your debt. This could be a restructured payment plan, for example, or a partial write-off.
Will a Debt and Mental Health Evidence Form write off my debt?
Although a DMHEF will certainly force your creditors to assess your case, it’s very unlikely that sending this form to your creditors alone will result in complete debt write-off. DMHEFs are designed to facilitate a dialogue between mental health professionals, debtors and creditors. As touched on above, while this can provide a foundation for exploring alternative solutions – some of which may result in more favourable terms when paying off your debt – the DMHEF should certainly not be viewed as a magic bullet that will clear all of your debt instantly.
Want to learn more about the DMHEF, the Breathing Space scheme, or the various debt management solutions you have available to you?