The Debt Respite Bill and How It will Affect You
What is the Debt Respite Bill, and what difference could it make if you’re struggling with mental well being whilst struggling to get out of debt?
Facing a growing pile of debt letters is never easy. It’s even harder when you’re also struggling with mental health issues. As far back as 2,000, the British National Survey of Psychiatric Morbidity found that the greater the debts of people living in Scotland, England and Wales, the more likely they were to suffer from mental health problems.
Earlier this year, The Money And Mental Health Policy Institute reported that: “23,000 people in England alone were struggling with problem debt last year whilst in hospital for their mental health. Many thousands more were managing debt whilst in the care of a crisis team in the community.”
Whilst the report doesn’t produce figures for Scotland specifically, there’s no reason to suspect the picture is any better.
Speaking about the people covered by the report, Labour MP Luciana Berger said, “Those people are likely to be receiving calls, texts and letters from their banks, local authorities and other creditors at a time of acute distress, and they are at risk of falling into further financial difficulty as a result of increased fees and charges.”
Debt And The Mental Health Link
Getting out of debt when your mental capabilities are diminished or disrupted can be incredibly difficult. Mental health can affect your ability to understand the financial problems you face. It can impair your ability to negotiate with creditors – so you’re less likely to be able to make your case effectively, and less likely to pick up the phone to them in the first place.
Mental health issues can change your perceptions and make you more likely act on impulse, potentially piling up more debt problems that leave you facing debt collectors, bailiffs, home repossession and bankruptcy.
The Debt Respite Bill
Given all that we know about the way mental health can adversely influence debt, it seems particularly harsh that creditors can add interest, impose late payment penalties and take enforcement action against people suffering a mental health crisis.
That’s the reason for the Debt Respite Bill. Under the bill, which is currently making its way through Parliament, people receiving treatment for mental health who are also struggling to get out of debt will have those debts effectively ‘frozen’ for a period of six weeks.
During that six weeks, creditors would not be able to add any further interest or charges, or take any enforcement action, such as commissioning debt collectors, applying to the court to appoint bailiffs (sheriff officers in Scotland) or taking action from debt collectors such as Scott and Co to repossess your home.
Of course, breathing space from financial pressure is only of real value if you use that time to improve the situation. Otherwise, after the six weeks, all debt recovery and penalty measures will simply resume.
So in addition to pressing pause on the debt, the bill also aims to ensure that those receiving mental care are encouraged to accept debt help too.
At Scottish Trust Deed, we are particularly supportive of this measure as it addresses the key issue that those with mental health concerns are least likely to ask for help in managing their debt.
By linking healthcare with financial care in such a way, we should see more people struggling to get out of debt given the time and opportunity to do so.
Debt Arrangement Schemes And Trust Deeds
If you are trying to get out of debt, whether you’re coping with mental health issues or not, there are a range of options open to you, and plenty of places to get help in making the right choice.
Those debt management solutions don’t have to be as drastic as bankruptcy, but they can help you write off your debt and start again. The Minimal Asset Process can be the ideal debt management scheme if you have few assets and debts of between £1,500 and £17,000. A Trust Deed Scotland debt solution is the equivalent of an IVA in England and could help you write off unaffordable debts of £6,000 or more.
The key to accessing any debt advice is to talk to an expert who can find the right solution for you. Because once your debt arrangement scheme is set up, you’ll stop facing the debt letters, charges and penalties for good – not just the six weeks offered by the bill.
Get Debt Help Today
We know that facing debt when you’re also facing a mental health crisis feels like tackling two mountains at once. But tackling one really can help in addressing the other. If you can’t wait for the Debt Respite Bill to become law act now and contact us. We can help you get out of debt.
Trust Deed Example
Example Unsecured Debts
|2||Credit card 1||£6,812|
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