Tackling your debts

How to handle your debts if you’re too ill to work and lose your job

Posted 06 March 2015

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If you’re paying towards debts every month, then falling ill and losing your job can affect how much you can afford to repay.

If you are struggling with multiple debts, but are just about meeting the minimum monthly repayments, you may feel that you are just about coping. But would you be able to cope if your circumstances changed? Would you still be able to make these payments if you were too ill to work and had to (or were forced to) leave your job as a result?

Bumps in the road

Life doesn’t stand still and losing your job because you’re too ill to work isn’t something that you can predict. But making yourself aware of all the options available will help you to have a plan of action in place, if the worst were to happen.


The first thing to check if you are worried is how long your employer will continue paying you full pay if you are off sick. Your HR department should be able to tell you, or check the staff handbook, or your contract, if you have one. Some employers are quite generous and will pay you full pay for a month or more, others may offer just a few days on full pay and some offer no days on full pay at all. Of course if you are self-employed, or on a zero-hours type contract, if you don’t work you don’t get paid.


Typically, after the time on full pay comes to an end, you will get statutory sick pay. When you’re off sick for more than 4 working days in a row, you are entitled to statutory sick pay for up to 28 weeks. This will be at the rate of £87.55 per week.


There is no timescale for how long an employer has to wait before they can start the process of ill- health dismissal. But whether they do or not, will depend on your job and the impact your absence is having on the company.

An employer won’t dismiss you easily, in fact if you decide that it is time to go, you may be able to negotiate some sort of compensation with your employer. If you’re illness continues, and you’re not able to find another job because of it, you should be able to receive financial support through an Employment and Support Allowance. To be eligible for this type of benefit, you must go to a work capability assessment.


Don’t forget to check if you’ve got an insurance that you may be able to claim on. Many people take a form of cover called ASU … Accident Sickness & Unemployment insurance when they get a mortgage, for example. You might even have PPI cover on a loan that you can claim on!


Once you know what money you’ll have coming in, you can start to draw up a budget and use this to prioritise your outgoings. The first thing to do is put aside money to pay your rent or mortgage, and essential living costs, such as food and the gas and electricity. Only if you have any money left over, after you’ve paid these, should you think about making payments towards non-priority debts, such as credit cards or loans.

Seeking help

Ultimately, if you find yourself in a situation where you’re too ill to work, it’s important that you make your lenders aware of this fact that and that you are in financial difficulties, so may struggle to repay back what you owe.


Once your lender is aware of your situation, they should work with you to put together a repayment plan or allow you to pay less towards your debts until you get back on your feet.


As well as contacting your lenders, you could also seek the help of a professional debt advisor. There are certain debt solutions, such as Debt Relief Orders or Individual Voluntary Arrangements, which are designed for people on low incomes … a debt expert can talk you through the various options.

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.