How To Deal With Debts Due to Illness
Having some form of long-term illness will be a worrying enough experience but having to cope with mounting debts will not aid the recovery process. Having debts while employed can be stressful enough but if you cannot work and have debts due to illness then a vicious circle can often be set in place.
Illness and Loss of IncomeFor many people illness does not necessarily mean loss of income. Long term sick pay from employers known as statutory sick pay will allow a sick person to have a certain percentage of their salary for a certain length of time. This percentage may then drop in relation to the amount of sick time. Some employees may start off at full salary for around six months and then drop to half salary for a further six months. This percentage is true of some, but not all employers.
A great number of employees will not receive any sick pay and will have to apply for government benefits when on long-term sickness. These benefits will be nowhere near enough to cover payments such as mortgages, rent, taxes and living expenses. This is when added stress can have a detrimental effect on the person who is ill.
Debts Causing IllnessIf a person is seriously suffering from heavy debts then the stress can sometimes be the cause of illness. People who are in debt can suffer from severe depression and stress, leading to absenteeism from work. Mental health experts have termed this condition as 'money sickness syndrome'. This stress and depression is a mental illness and help should be sought as soon as possible.
Payment Protection InsuranceIf you have taken out payment protection insurance (PPI) on your credit and loan arrangements then you should claim for these as soon as you have been signed off sick by a doctor. This insurance should cover your credit repayments for you for a set amount of time, usually a year.
Contact your CreditorsIf you do not have any form of PPI then contact your creditors as soon as possible. If you explain your situation to your creditors regarding your debts due to illness then negotiating repayments should not be a problem. Creditors are usually understanding in these circumstances and should offer to either stop interest and/or lower repayments until you can afford to repay them.
If you find that creditors are unwilling to renegotiate then contact your Citizens Advice Bureau who will be able to offer financial assistance. They will also be able to contact creditors for you and by taking this step creditors will take your circumstances seriously. If you are a good customer with a good credit record there should be no reason why repayment negotiations cannot be made.
The Doctor's LetterWhen contacting any creditors make sure that you have a letter from your doctor with details of you illness. In many cases this letter will be the only proof that you can show to creditors and it will make a difference with repayments. It is not unheard of for creditors to simply allow you to stop repayments, or even write off the debt completely on the strength of a doctor's letter.
Credit Lenders and IllnessThere are some credit lenders who are notoriously unsympathetic when it comes to illness and debt repayments. They are usually the largest high street lenders that offer credit to low income earners but apply exorbitant levels of interest. Many of these lenders will demand their money no matter how ill you are. When confronted with this type of lenders the important thing is not to panic; you do have consumer rights.
Seek advice from your Citizens Advice Bureau who will be able to contact the lender for you. Make sure if the lender has applied PPI to your credit that you claim for this. Under no circumstances should you pay these lenders before you have paid your priority debts such as mortgages and energy bills. If any threatening tactics are used by these lenders report them to the Office of Fair Trading and make them aware you will be doing this.
Many people never factor in debts due to illness into any form of budgeting or money management plan. But illness can strike at anytime without warning and some form of cover should be set in place. Contacting creditors as soon as a doctor has signed you off work due to long term illness is a wise move. The quicker you receive any benefits or medical insurance the quicker your stress will be relieved and your recovery can begin.