Financial & Legal News

The mental and physical health issues caused by debt

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A recent report, “Life on Debt Row”, acknowledges what many people know all too well: debts are bad for a debtor’s physical and mental health. Debts also have a negative effect on a debtor’s family and friends.

The RSPH report, “Life on debt row”

The report was published by the Royal Society for Public Health (RSPH) gives some sobering statistics:

  • There is £1.71 trillion worth of household debt in the UK.
  • £242 billion of that sum is consumer credit (e.g. credit card debt) – an increase of 34.5% since 2012.
  • More than six million Britons believe they will never be debt free.
  • In 2016, nearly nine million people in the UK used credit to pay for everything.

As acknowledged by the RSPH, credit (for example by way of an authorised overdraft or on a credit card) is not an inherently bad thing. It can temporarily relieve financial pressures as well as provide the means to invest in setting up home or improving productivity.

Credit is widely available. Examples include: catalogue credit, doorstep loans, guarantor loans, weekly payment stores, logbook loans, store cards, pawnbroker loans, store finance and credit union loans. The report deals with all of these in brief.

If it is affordable and provided on fair terms, credit can also help people to get out of poverty.

However, increasingly, low-income households have been targeted with loan mechanisms such as “payday loans”, “rent to own” and loans offered by door-to-door lenders. These loans tend to be available to those with a low credit rating and can be very expensive. While there are laws regulating the amount of fees and interest payable, such loans can, if not repaid in full and on time, cause the initial loan to increase dramatically in a short time. The debt can soon get out of hand.

The physical and mental effect of loans

The RSPH report gives the results of a survey, completed by over 500 debtors, which finds that payday loans, closely followed by unauthorised overdrafts cause the most negative impact on debtors’ mental health.

Debtors find keeping up with payments and having to miss some payments a heavy burden – one that’s suffered by debtors’ families too. It can cause stigma, distress and depression. It can have consequences on debtors’ physical health (resorting to alcohol or smoking or needing extra medication) and mental health which can affect debtors’ jobs, living arrangements, housing and their children’s education.

Recommendations by the report

The report makes clear recommendations:

  • All stakeholders should work together to promote affordable credit options and reduce the cost of high-cost credit.
  • Lenders should ensure that employees can access mental health training and carry out mental health assessments before providing credit.
  • The marketing of credit products to vulnerable people should be prevented.
  • Lenders, health services, local authorities and universities should provide better signposting to debt advice and health service provisions.
  • The national curriculum should be funded to teach children how to deal with their finances.
  • Health warnings should be included in credit agreements.

In debt? Take action!

If you are struggling with debts, remember that you are not alone: many people are in the same position.

However bad your situation, taking action is far better than ignoring the debt.

What can you do?

  • Take the time to address the debt issues you face. Make contact with the creditor. The debts will not just go away; payments will continue to be due, creditors will continue to chase you – and if you do nothing, you could end up in a far worse financial position which could affect your health.
  • Don’t ignore formal documents like letters demanding payment of court documents. If you do not deal with these claims, you could end up with a County Court judgment being entered against you. That will be more expensive and time-consuming in the long run. (You will have to correspond with both the court and the claimant and you might incur legal fees if you need help from a solicitor).
  • If you do have a court judgment recorded against you, that could affect your credit rating.
  • Deal with court documents straight away: it is better to either accept responsibility for the claims you accept and pay up or act promptly to ensure you have the full opportunity to put forward any available defences. You might also be able to negotiate payment in instalments.
  • If you dispute the debt, you may need to take legal advice to ensure you have a legal claim before resisting payment.

Guide to dealing with debt claims and County Court Judgments (CCJ)


For more information on how we can help you to deal with your debts or a CCJ, contact Christopher Burke on dispute resolution issues on 0161 684 6941 or make an enquiry.

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.

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