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 reduced. One of the difficult hurdles to overcome that contributes 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. There is also the added stress of trying to keep up with expenses and debt payments.
Becoming ill when you have a high debt burden can impact every area of your life, and those impacts can often incur costs of their own:
- You may have to spend a proportion of your time sleeping or resting, rather than at work, which may cause a reduction in income.
- Financial issues are often the last thing you think about when you are ill, and so often become the most neglected.
- 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 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 physical one, it can take 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 may be 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. Many employers have a sick pay policy, which is often your full salary for a period of time 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 not guaranteed. If you drop to half pay or disability benefits, it may be unlikely that you will be able to keep up with your full debt payments.
If it looks likely that you will be sick for some time, it is recommended that you put a plan to manage your debt in place as soon as possible.
So How Can A Trust Deed Help?
As soon as you know that your illness is likely to be long-term and involves a drop in income (by long-term we mean six months or more), speak to an experienced Trust Deed Adviser.
Trust Deeds typically 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.
Should your income drop, 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 debt Advisers.
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