How To Combat Debt When You Are Sick
It’s a mistake to think that debt is created by people going out and spending on consumer goods they can’t afford. In fact, debt is more often due to trying to keep a roof over your head when your income has dried up. One of the most frustrating and hard to overcome problems leading to this is illness. Unlike redundancy, physical or mental illness will leave you unable to do a job until you are recovered, if recovery is possible at all. And then there is the added stress of trying to make ends meet and keep up with debt payments.
Becoming ill when you have a high debt burden impacts on every area of your life, and those impacts can often incur costs of their own:
You may not be able to physically, mentally or emotionally keep up with the speed that your income is dropping, especially if you have to spend a proportion of your time sleeping or resting
Financial issues are often the last thing you think about when you are ill, and so often become the most neglected
As your health deteriorates it becomes increasingly difficult to sort your finances out, especially trying to make yourself understood to a third party who is involved and trying to help
It can become very expensive if respite care is involved
You may have to pay for transport to take you for treatment
The increased costs associated with getting treatment, such as prescriptions or alternative medicines, may make meeting your debt payments increasingly difficult
You may need to pay for a carer
You may decide to use private treatment to speed up your return to work, but you may have to foot some of the costs
If your job is a very physical one it can even longer to return to your fitness levels before your illness
When you do return to work you may not be able to complete a full day and asked to work part-time until you can be assessed
What About Sick Pay?
In the short-term your employer’s sick pay policy will allow you to bring in enough income to cover your living expenses. Most employers have a sick pay policy, which is often your full salary for six months and then half pay after this. Some companies have no sick pay policy, in which case they have to pay you statutory sick pay of £81.60 a week.
What if I Can’t Go Back To Work?
If you cannot go back to work you should be able to claim disability benefits of some kind to help financially support you but that is by no means guaranteed. If you drop to half pay or disability benefits, it is unlikely that you will be able to keep up with your full debt payments (if you still are at this point), which will make the situation much worse as creditors will start to bother you when you are sick.
So, if it looks likely that you will be sick for some time and you are able to do so, the sooner you start the ball rolling with some kind of plan to manage your debt the better off you will be in the future.
So How Can A Trust Deed Help?
As soon as you know that your illness is likely to be long-term and involve a drop in income (by long-term we mean six months or more), speak to an experienced Trust Deed Advisor. Trust Deeds run for four years and are based on you paying what you can afford each month – which is usually much lower than your minimum payments - and then writing the rest of your debt off at the end of the Trust Deed term. This will make your debt payments a lot more manageable should your income drop and your Trust Deed Trustee may be able to arrange a payment holiday if there are any periods where you are waiting for your income to stabilise.
If you know you are likely to be ill for six months or more, don’t wait until your income drops before calling one of our Trust Deed Advisers. Do it now and get your creditors off your back and your debt managed until such time as you are strong enough to take financial control of your future once more.
Trust Deed Example
Example Unsecured Debts
|2||Credit card 1||£6,812|
|3||Credit card 2||£4,092|
|4||Credit card 3||£5,399|
|4||Credit card 4||£5,200|
Your Monthly Repayments Would Be
a Scottish Trust Deed £748
(total contractual repayments)
a Scottish Trust Deed £295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances. For more information on our fees click here