From the archive: Debt and depression – cause or effect?

Elizabeth Grey /   April 18, 2014 at 8:38 PM 4,156 views


The correlation between debt and depression, as well as other mental health issues, is well established. According to the Royal College of Psychiatrists, while a quarter of people with a mental health condition are in debt, half of the people in the UK with debts also have a mental health problem.

GPs are reporting that they are now referring people with mild to moderate depression and debt problems to debt counsellors and services instead of prescribing anti-depressants as the first course of action, as it can be just as effective at reducing symptoms as medication.

Given that the Citizens Advice Bureau (CAB) deals with over 7000 debt problems a day and depression costs the British economy 155 million working days a year, unravelling the connection between the two could have a significant impact for the country as a whole, as well as individuals struggling with the twin burdens of depression and debt.

How debt contributes to depression

No-one doubts that being in debt is a difficult situation, especially when it escalates to what is known as problem debt. Problem debt occurs when an individual is struggling to cope with their debt and as a result misses two or more minimum payments on at least one of their accounts.

Problem debt tends to bring its own issues: being behind with repayments results in the debtor being chased by debt collectors and affects their credit rating. This often mean that if the individual needs to access credit later, they may find that only high-interest options like pay-day loans or doorstep lending are available to them.

The stress this causes can make any existing depression worse, or even create it at a neurological level.

The mental health charity MIND highlighted the deprivation caused by problem debt in a survey, with over 50% of respondents saying that they’d gone without eating as a result. Poor nutrition itself can be another contributing factor to depression.

People who are struggling with debt also tend to end up socially isolated – partly out of guilt or embarrassment about their problems and partly because they often lack the extra cash for even basic socialising, like the bus or train fare to visit friends and family, or to keep credit on their mobile. This isolation can in turn contribute to depression, one of the symptoms of which is social withdrawal, creating a classic vicious cycle.

How depression contributes to debt

The same MIND survey on debt and depression found that 66.2% of people they spoke to said that mental health issues were the main reason they were in problem debt. Meanwhile 65% felt that living on a low income had contributed to their financial difficulties.

When depression is severe enough to affect someone’s ability to hold down a full-time job long-term, it seems obvious that this will cause financial problems such as being unable to cover expenses like utilities breaking or even needing new shoes.

Meanwhile, if someone is unable to work because of serious depression, the government welfare reforms can leave vulnerable people without money while they wait for their ESA WCA or their PIP application to be processed. This can lead to running up payday loans or missing essential payments for utilities or rent, which then become priority debts.

Depression can also contribute to debt in other ways. In many people, it manifests as cognitive disruption or “freezing” that can make something as seemingly simple as opening bills difficult, if not impossible. This means that even just going into an unauthorised overdraft or not setting up a direct debt to cover credit card minimum payments can snowball a small debt or non-payment charge into a much larger sum.

Dealing with financial problems can be stressful for people without mental health problems. If people have cognitive disruption and physical fatigue, common symptoms of depression, calling banks or credit card companies and filling in forms can seem impossible to do without support.

There seems to be a two-way causality between debt and depression. What is clear is that the widespread problems faced by people with depression indicate a need for more holistic mental health support.

Courtesy of Elizabeth Grey

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