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Wednesday, Oct 01, 2025

Debt and mental health: Covid has increased the pressure but help is available

Debt and mental health: Covid has increased the pressure but help is available

Strain on finances is expected to become more acute as coronavirus support schemes are withdrawn

Sarah Douglas has struggled with debt and poor mental health for decades, and says the Covid crisis has made matters worse. “The pandemic has aggravated existing issues for people like me,” says the 51-year-old from Bristol. “It’s massively stressful dealing with the uncertainty but for someone prone to mental health problems, it’s particularly bad.”

Nine years ago, Douglas was diagnosed with autism, and she also has ADHD. “I didn’t understand why I was struggling with money so much before then,” she says “I wasn’t good at budgeting, a low income didn’t give me much to live on, and stress makes this worse.”

Douglas, who has been on long-term sick leave from work since December 2020, racked up £22,000 worth of credit card debt over 10 years. “I would spend and become depressed. It was a vicious circle,” she says.

Sadly, Douglas is far from being alone, and charities fear that their services will come under increasing pressure as debt problems escalate in the wake of the coronavirus crisis.

Research from the Money Advice Trust, the charity that runs National Debtline and Business Debtline, found that a quarter of people suffering financial difficulty as a result of Covid-19 reported a negative impact on their mental health.

“Many people caught at the sharp end of the outbreak, who have seen their finances severely impacted and debts pile up, also report a decline in their mental health,” says Jane Tully from the Money Advice Trust.

“Without coordinated action to help people get back on a stable financial footing and provide safe routes out of debt, there’s a real risk of problem debt becoming one of the pandemic’s lasting legacies.”

Sarah Douglas says: ‘The pandemic has aggravated existing issues for people like me.’


Those on the lowest incomes are most likely to be affected by mental health problems. The typical income for people with common mental health conditions is £8,400 lower than for the rest of the population, according to research by the charity the Money and Mental Health Policy Institute.

People with poor mental health are more likely to be out of work, in part-time roles and lower-paying occupations. The freeze on working-age benefits over recent years has also contributed to a financially fragile position for people with poor mental health.

The pandemic has devastated many vulnerable people with mental health problems, and led to a number of new cases. Latest NHS figures show the number of people in contact with mental health services has reached 1.27 million, the highest since the first lockdown in March 2020.

The strain on people’s personal finances is expected to become more acute as government Covid support schemes are withdrawn. As the furlough scheme is wound down there is a risk of further redundancies, while the ban on evicting private tenants has expired. The average amount of rent owed by those in rent arrears during the pandemic amounts to about £900, according to the National Residential Landlords Association.

The charity StepChange says it saw the number of people who are in severe debt soar from 1.7 million to 2.4 million from March 2020 to January 2021.

The organisation, which recently came under fire from the union Unite for announcing redundancies itself, says that temporary emergency support measures through furlough, benefit uplifts and creditor payment deferrals mean debt problems have been “kicked down the road” for millions of households.

Sue Anderson from StepChange says: “Around 14 million people have suffered a hit to their income affecting their ability to pay for essential costs since March 2020, and those with mental health issues have been disproportionately affected by problem debt.

“Half of all our new clients going through full debt advice last year had additional vulnerabilities, with around a third of these attributable to mental health. Withdrawal of support measures, which have acted as a lifeline for many vulnerable people, such as the £20 uplift in universal credit, will cause further hardship.”

Charities are calling on the government to keep the uplift to universal credit, currently set to end in September. “It’s been a lifeline for millions,” says Dame Clare Moriarty, the chief executive of Citizens Advice.

“It’s scheduled to end in the autumn, just as the furlough scheme winds down, which will leave many people facing a new financial cliff edge. Maintaining support like this will be vital to prevent families falling into unnecessary hardship.”

One problem for people is the stigma surrounding money and mental health problems, which means that some affected by either or both do not seek help.

Conor D’Arcy, the head of research and policy at the Money and Mental Health Policy Institute, says that people who are struggling try to “see the big picture, as it’s such a common problem, so they shouldn’t feel ashamed”.

Talking through the problem with someone close to you who you trust is a good starting point. This can help alleviate the burden and help you to come to terms with your worries to make your debts feel more manageable. If you do not feel comfortable speaking to someone, charities such as Citizens Advice and StepChange can help, too.

“While it’s daunting, speaking directly to lenders may also be helpful,” says Justin Basini, the chief executive and co-founder of the credit reference agency ClearScore. “They may be able to offer support with a payment plan or pausing interest payments – after all, it’s in their interest to help you make all your repayments.”

For Douglas, approaching StepChange for help four years ago was a breakthrough. “They saved my life,” she says.

She is now on a debt management plan with a three-month payment holiday. She has no overdraft or access to credit, and a basic bank account.

However, she worries that the impact of the pandemic might undo her progress.

“ADHD brain wiring can result in a lot of impulsive behaviours and, in my case, that, as well as stress, depression and anxiety, resulted in impulsive and reckless spending. But I understand now there is no shame around suffering debt and mental health issues.”

What to do if you’re struggling
Tell your lenders


“Most can set up a payment plan or put your interest on hold once you’ve explained your difficulties,” says ClearScore’s Basini. Financial firms are required under the lending code to treat those in debt – and particularly borrowers with mental health problems – sympathetically and help find a workable repayment plan.

Seek help from charities and online advice services


The Mental Health and Money Advice site offers practical advice, support, financial tools and further contacts.

You can seek anonymous advice from debt charities such as National Debtline (nationaldebtline.org or call 0808 808 4000) and StepChange (stepchange.org or call 0800 138 1111). Citizens Advice has launched a debt helpline in response to the pandemic on 0800 240 4420 (citizensadvice.org.uk).

Consider a specialised debt repayment plan


For example, StepChange offers a “Covid payment plan” for anyone facing debt struggles on a reduced income during the pandemic. This enables you to make reduced debt repayments for the period that you are on a reduced income, up to a maximum of 12 months.

Check if you are entitled to any benefits


Use the free calculator from the charity Turn2us.

Take advantage of a breathing space


You can apply for two months’ worth of “breathing space” via a debt adviser if you are struggling with serious debt, during which you cannot be chased by lenders while you seek help. If you are receiving mental health crisis treatment, this extends to as long as you are in treatment, and for 30 days afterwards.

Make sure you are aware of all available help


Research by Citizens Advice reveals that people with mental health problems pay more for essential services, such as energy, by up to £1,550 a year. Contact your supplier and ask for help with your bills, and ensure you are on the best deal.

Other tips and sources of help


National Debtline, in partnership with the Money and Mental Health Policy Institute, offers a factsheet on how to deal with debt. This includes how to provide evidence of your mental health situation to your creditors, by filling out a debt and mental health evidence form.

You can include details of your personal financial circumstances on future product applications by adding a notice of correction to your credit file that lenders consider alongside your application. For example, you could state that you are currently seeking advice from a debt charity to manage future payments, if your credit score has suffered because of mental health problems.

In partnership with Barclays, Mind is launching Investing in Mental Health to support people with mental health problems who are facing financial difficulties. Further tips can be found at www.mind.org.uk/money or call 0300 123 3393.

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