How to deal with Illness and Debt

Posted 19 January 2016

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Are you worried about the debt you’ve got because you’ve fallen ill? Falling ill does not have to mean financial disaster. Our guide will tell you where to get the help and support you need.

From the experience we’ve gained helping more than 400,000 people tackle their problem debt, we know that there really is a link between your mental and physical health and your financial health. If you find yourself battling a long-term illness, this can seriously disrupt your work and, therefore, your earning potential. That lack of income means that repaying anything borrowed can be more difficult and, for some, results in unmanageable levels of debt. 


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Finding yourself with problem debt is itself stressful, which could in turn have a further negative impact on your mental and physical wellbeing. In fact, for many people the problem debt comes first, and leads to the illness. 

So it’s easy to see the difficulty some people face if they’re trying to deal with both health issues and financial issues at the same time.  Whatever your situation, if you’ve got unmanageable debt we want to help. There may be a debt solution available to you that could transform your situation. Make sure you seek the help you need by exploring the rest of the site and speaking to one of our debt advisors using the options to the left. 

In the rest of this blog we’re going to look at the sick pay you could/should receive depending on your circumstances, and the help that’s available to people who are ill and dealing with debt. 

Statutory and company sick pay

If you know that you’re going to be off ill for a significant period of time then it’s really important that you check the sick pay you’ll be entitled to and how long it will last. The earlier you can prepare for any loss of income, the earlier you can make adjustments in your budget to allow for them and possibly avoid having to borrow altogether – or at least foresee a financial issue before it happens. 

There are two types of sick pay you may be entitled to if you’re going to be off work for a while. Company sick pay or statutory sick pay. Company sick pay is specific to your employer and varies from place to place. You’ll find details about your employer’s sick pay scheme in the contract you originally signed when you started working for them, or if you can’t find that, you should contact their HR department for information. 

Even if your company does not offer sick pay long-term, they will still have to pay you Statutory Sick Pay (SSP). SSP can pay you up to £88.45 per week, you’re entitled to it by law, and it’s available for up to 28 weeks. To find out what you should be entitled to you can use the Government’s calculator. Now, you’ll only be eligible to get this if you’re already earning over £112 per week in your job. If you’re an agency worker or you’re on a fixed term contract then you’ll still qualify for SSP but self-employed people are not entitled to it. 

Two important things to remember about SSP are that it’s treated as income, so you will have tax and national insurance deducted from it, and if you have two jobs you can claim SSP from both employers. You also won’t be paid SSP for the first three days that you’re off work (unless you’ve already received it in the last eight weeks.) 

Benefits if you’re sick or disabled

You may find that you fall into a category which means you can’t get SSP – say if you don’t earn enough, or because you’ve been off work for longer than the allowed 28 weeks period. If this happens you’ll receive a form from your employer called a SSP1 informing you of this. From this point, it may be possible for you to claim Employment and Support Allowance and you’ll need your SSP1 form to do this. For a full list of what you need to do to claim this benefit, click here

There are a range of other benefits you could be entitled to if you’ve recently become ill or disabled. They include Personal Independence Payment, Disability Living Allowance, as well as housing benefit and help with council tax. For a full list of the benefits that you could receive if you’re on a low income due to illness or disability, click here. Don’t forget that if your condition requires a loved one to care for you, they could also be entitled to Carer’s Allowance.

Borrowing whilst you’re ill

While forward planning can help you if you know your income will fall, it’s not unheard of for people to feel they have to borrow to get by because their sick pay and/or benefits are not enough to see them through. 

Although we understand that the temptation to borrow at this time may be very strong, it’s never a good idea to take credit out if you don’t have a realistic plan to repay the money. A better idea is to look into the help available from charities designed to assist people in financial hardship. Turn2us is a great resource that allows you to find the relevant charity that could help you, so if you’re in this situation make sure you use their grant finding tool

Dealing with existing debts and illness

If you find you’re unable to keep up with the payments on your existing debts because you’re ill and have seen a loss in income, contact your lenders as soon as possible. This also applies to organisations that you may owe money to but are not lenders, such as utility companies and other service providers. 

If you feel up to it, you should pick up the phone and explain your situation to their representative. If you can prove the reason for your difficulty – which you will be able to do with a doctor’s letter or your sick note – you may find that they are understanding and willing to make some changes to your repayments to help you. This can take the form of freezing interest and charges, so that your debt won’t grow, lowering the payment amount, or allowing you to take a temporary break from paying the debt back, known as a payment holiday.  

What should I do if my lender won’t make any changes?

If you find that your lender is unwilling to be flexible to help you, even with a doctor’s letter, or if you don’t feel able to speak to your lenders yourself, don’t panic.  You should seek outside, expert help. You can contact one of our debt advisors using the options on the left. They can tell you whether there are any debt solutions available to you that can bring it back under control. 

Alternatively you can contact The Money Advice Service which can give you lots of information on your options going forward. 

It also makes sense to look into whether you have any insurance cover that could help.  If you have a mortgage, you might have Mortgage Payment Protection Insurance, or Accident, Sickness and Unemployment Cover.   If you are seriously ill and you have Critical Illness insurance you may be able to claim on that.  You should also check if you were ever sold Payment Protection Insurance (PPI) on any of your accounts – such as loans and credit cards. This was an insurance to cover you if you were out of work, or fell ill and therefore couldn’t work. It’s basically designed for the very situation that we’ve described in this blog. If you do have the insurance then it’s possible that you could use it and have your repayments covered. 

However, as we’re sure you’re aware, this insurance was mis-sold on a huge scale and banks are still putting money aside to compensate customers who had this insurance added to their account when they shouldn’t have. If you find that you were paying for this insurance and you didn’t know about it then you may be able to claim back the money it cost you and use this towards your debt. Of course, if you’re off work ill and you try to use the insurance and you’re told that you’re not able to for whatever reason, it’s very possible you were mis-sold. You could have been paying for something that, now you need it, is no use to you. For more information on the PPI scandal and how to go about claiming, have a look at our blog “There’s still time to claim for PPI.

Whatever you do, never sacrifice paying a priority bill so that you can make a payment on an unsecured debt. Your priority payments are payments that, if left unpaid, would have a serious negative impact on your life. For instance, not paying your rent or mortgage could result in a loss of home and not paying your council tax could result in fines or even a prison sentence. Our blog “What are Priority and Non-Priority debts?” should tell you all you need to know about which payments should come first in your household. 

Seek the help you need and deserve

Dealing with an illness that means you have to take a long time off work is worrying enough, so we understand that, when you throw money issues into the mix, it can feel overwhelming. If you feel that your mental state is suffering as a result of this, make sure you seek help. Our blog Debt and Depression tackles the issue of how financial problems impact mental health, and Mind is a great resource with lots of advice on this topic. In terms of the debts themselves, make sure you know what financial help you’re entitled to, inform your lenders of your situation and, if your debts are unmanageable, speak to a debt expert. 


by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.