The practical issues raised by debt are obvious and are frequently discussed at great length. However, there is also an emotional side to financial problems. Debt brings a great deal of stress and anxiety and in some cases these things can have a greater negative impact than the inability to pay for certain things.
Some people cope with debt better than others, but it has been found that the more debt a person has, the more likely it is that they will be suffering a form of mental disorder. There is a general correlation rather than a direct cause-and-effect, but it does indicate a likely link.
Familiarity with debt
While a person’s response to debt will be an individual thing, there are certain circumstances which make a stronger negative reaction more likely. An example of this would be where a person has minimal experience of debt. It seems that debt size is actually less significant than how normal someone perceives being in debt to be.
A study carried out by Dr John Gathergood of the University of Nottingham found that those who spent time in an environment where debt was common experienced less stress than those in areas which were less affected by issues such as bankruptcy and repossession. It therefore seems that a lot of the anxiety actually results from the social stigma which comes as a result of being in debt.
This study found that people were over twice as likely to suffer severe anxiety or another mental health issue if they were struggling to pay off debts. Where that debt involved mortgage or rent arrears, the rate climbed further to three times what would be expected for people who were debt-free. This amounted to around a fifth of those people who found themselves in such a position.
There is also a tendency for stress and anxiety to spill over into other aspects of a person’s life and this is where emotional problems can start having an even greater impact. Many people involved in the study mentioned above reported that they were struggling to concentrate and were having difficulty making decisions.
Financial pressure can also lead to feelings of guilt and lack of self-worth and all of these things can contribute to deterioration in people’s relationships, where tension and conflict may become more apparent. When this happens, mental health issues can be compounded and it is possible to see how the situation can spiral out of control.
The nature of the debt
Another study, carried out by Professor Richard Disney and Dr Sarah Bridges of the Nottingham School of Economics looked at how different types of debt affected people. They separated ‘formal’ debt from ‘informal’ debt, defining the former as mortgages and similar, and the latter as borrowing from friends and family, but also from money lenders.
They found that formal sources of debt actually resulted in less stress than informal sources, except where the person was in arrears, which again underlines the point that the emotional impact isn’t necessarily linked to how much a person owes
However, this doesn’t tell us much about how depression can contribute to debt, because of course it affects behaviour and decision-making and can therefore play a part. This means that the two problems can become intertwined, making it that much more difficult to resolve either of them.
The Royal College of Psychiatrists recommends seeking expert help for depression and the same advice holds true for debt problems. If both issues are tackled at the same time, the person stands a better chance of overcoming them. This means speaking to a general practitioner, who will then typically make a referral as well as perhaps prescribing medication. It also means getting in touch with a registered debt specialist who may be able to help the person take advantage of certain debt management schemes which they wouldn’t otherwise have access to.
Addressing both problems minimises the likelihood that one issue will cause the other to further deteriorate.
Ideal DS have provided an insight into the common links between debt and depression and procedures that members of society can use to reduce debt, and depression caused by debt.
Andrew Rosler is an insolvency and debt advice expert with more than two decades worth of experience providing insolvency and business recovery advice. Andrew currently runs Ideal Debt Solutions which is a company dedicated to helping both individuals and businesses with their financial situations.