According to figures published by the Money and Pensions Service, a UK government body set up to boost financial literacy, 17% of UK adults owe more than they can afford. Out of those nine million people, only a third seek help, which means around six million are trying to cope with the burden of debt alone.
The stress triggered by this burden can severely affect a borrower’s well being. A study by the Royal College of Psychiatrists found that half of those in debt suffer from mental health problems like anxiety and depression. They may also experience physical symptoms such as heart disease.
Financial stress takes on an extra dimension for Muslims, because in Islam interest-laden debt is to be avoided at all costs and debt in general is seen as something that one should try to avoid unless necessary. If you’re struggling with debt, it’s important to realise that support is available. The Mental Health Foundation, a UK charity dedicated to helping people manage their mental health, suggests steps you can take to ease the stress and reclaim control of your finances.
Speak to an advisor
Several organisations offer free access to a debt advisor, including StepChange, National Debtline, Debt Support Trust and Citizens Advice. These advisors provide confidential, expert and non-judgemental advice about getting out of debt. They recommend solutions specific to your circumstances, which may involve setting up a debt management plan, or applying for an individual voluntary arrangement to agree affordable payments. You can book an appointment online, over the phone or find a local advisor for a face-to-face meeting by visiting Money Helper.
Apply for Breathing Space
Breathing Space is a government-backed scheme that buys you time when you’re concerned about unmanageable debt. It prevents creditors from charging additional fees or taking action against you while you seek advice and the right solution for your circumstances. The standard scheme, which you can apply for once every 12 months, lasts 60 days. The crisis version is only available to those receiving mental health crisis treatment, and it continues as long as necessary. However, it’s important to note that breathing space isn’t a payment holiday, so you have to continue repaying your debt while you’re protected by it.
Appeal to your lenders
Speaking to your lenders and explaining why you’re struggling to repay your debts could encourage them to show some flexibility. This step may be difficult, however you can find out whether a creditor is amenable by checking if they publish a debt and mental health policy or have a specialist team dedicated to vulnerable borrowers. Before you speak with a representative, decide how much information you’re willing to share and what kind of support you need. You can also ask your doctor or therapist to complete a debt and mental health evidence form to back up your appeal.
*As with any investment, capital is at risk, as the value of your investment can go down as well as up. Consult your financial advisor before implementing any plans as your needs may differ.