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Debt and Mental Health

The important link between mental health problems and debt has been confirmed by a number of different studies in recent years.

In October 2009 research by the Royal College of Psychiatrists and Rethink, funded by the Money Advice Trust (MAT) and the Finance & Leasing Association (FLA), stated that one in two British adults in debt may also have a mental health problem.

Additionally, in September 2010 a study by the mental health charity Mind found that the issue of being in debt and being pressurised by creditors and bailiffs was having a significantly adverse effect on Britain's mental health.

50% of people surveyed by the charity reported suicidal feelings after a knock on the door from bailiffs, whilst 96% reported increased levels of anxiety after a visit from bailiffs and 87% reported increased levels of depression.

In a recent case study, Colin Trend, consumer expert and Project Director of Money Advice South West, said that he encountered a situation where a bailiff told a woman with mental health problems that she would go to prison if her Council Tax was not paid.

Although it is true that non payment of Council Tax in England & Wales could result in imprisonment, recounting the case, he said: "This would be bad enough for someone without mental health problems, but for those like the client above, it can lead to further deterioration that has lasting impacts on the individual, family and society at large in terms of lost productivity."

Various debt experts have also weighed in on the issue of debt and mental health, saying that local authorities and creditors using bailiff services have a duty of care to treat vulnerable debtors fairly.

Anthony Sharp, Chairman of the Money Advice Liaison Group (MALG) pointed to his group's guidelines and form for dealing debtors who have serious mental health problems, said: "As Chair of the Money Advice Liaison Group I commend creditors, debt collection companies and advisers to ensure that they are conversant with the MALG 'Good Practice Mental Health Awareness Guidelines' and the Debt & Mental Health Evidence Form where there are cases of individuals whose mental health condition is such that they are unable to manage their financial affairs.

"These documents have been produced to facilitate work with those with mental health conditions and are downloadable from the web."

Kevin Still, Director of Atlantic Financial Management, added: "It is important that the debt advice, creditor and credit services sector collaborate together to treat vulnerable people fairly where they have unmanageable debts and a mental health condition.

"The MALG good practices have helped clarify how debt management companies can assist in this process in their negotiations with creditors and their debt recovery agents. The new Evidence Form is much easier to deal with and we have trained personnel that are able to use the form."

However, it is clear that challenges remain in dealing with debtors with mental health problems. Anthony Sharp confirms this, explaining: "Probably one of the greatest hurdles responsible collectors or bailiffs have in this area is detection of a mental health problem - distinguishing between those who are genuine and those who are false and treating sensitive cases properly on the doorstep."

Atlantic have a support team trained to deal with such cases with debt problems and to assist in the completion of the Evidence Form where a debt advisor identifies that debt relief may be achievable based upon the individual's circumstances. Atlantic have developed communication strategies with creditors, collectors and bailiffs that work with the MALG Guidance notes. Atlantic also has access to expert advice where an individual's case warrants it.