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Helping people in mental health crisis avoid spiralling debt

The Money and Pensions Service (MaPS) has launched a new pilot to help people in mental health crisis avoid worsening debt problems.

The government-backed MaPS, which is the largest funder of debt advice in England, has committed £94.6m overall in 2021/22 to support vital debt advice services as people continue to grapple with the financial impact of the pandemic.

As part of the increased funding, MaPS is investing £2.4m in a pilot which joins up the mental health sector with debt advice services, to refer people in crisis for a Mental Health Crisis Breathing Space.

Under the Breathing Space scheme, which launched on May 4, people with problem debt will be given legal protections from creditors chasing them for payments and a freeze on most interest and charges on their debts for up to 60 days. A standard Breathing Space can be applied for through debt advice. 

A Mental Health Crisis Breathing Space is specifically for someone who is receiving mental health crisis treatment, who may not be able to access debt advice and apply for Breathing Space themselves.

It enables an application to be made on their behalf to a debt adviser, based on evidence provided by an approved mental health professional. This Breathing Space lasts for the duration of their treatment plus 30 days, to prevent their debts worsening while they are in crisis.

The pilot will be run by the charity Rethink Mental Illness over the next 12 months, and is expected to support around 6,300 people living with severe mental health problems to apply for breathing space from their debts.

This will be delivered through the creation of a single online point of entry, managed by MaPS, for qualified mental health practitioners to easily refer their patients for a Mental Health Crisis Breathing Space. MaPS will also fund specialist Breathing Space training and support for debt advisors across the sector.

Rethink Mental Illness will process Mental Health Crisis Breathing Space referrals and support the client after they leave crisis care to provide debt advice where appropriate.

Caroline Siarkiewicz, chief executive at MaPS said: ‘Even before the pandemic, 18% of people with mental health problems were also in problem debt.

‘The effects of the pandemic has impacted significantly on the mental health of many, and worsened existing problems for some.

‘We know that people in this situation may find it harder to engage with debt advice and are being chased for their debts when they are least likely to be able to deal with it.

‘The toll of coronavirus on some people’s financial wellbeing will continue to be severe and long-lasting.

‘Although many have already been helped by support schemes, and special flexibility on products such as mortgages and loans, there are likely to be challenges ahead when these come to an end.

‘Throughout the pandemic, we have taken action to ensure more support is available to people in need of debt advice, and our increased funding for the next 12 months continues our commitment.

‘We hope that our pilot, which will refer people for Mental Health Crisis Breathing Space and help them avoid worsening debt problems while they are in crisis treatment, will support future larger scale roll-out of initiatives which join up the healthcare sector with debt advice services.’

Sarah Murphy, associate director of advice, information and training at Rethink Mental Illness, said: ‘Financial worries not only present a barrier to recovery, they can also act as a catalyst to deteriorating mental health.

‘Mental Health Crisis Breathing Space will offer a lifeline to people in problem debt who are experiencing a mental health crisis.

‘This innovative pilot provides specialist financial support at a crucial time, so people don’t emerge from a mental health crisis to learn that their financial situation has spiralled out of control.

‘We’re proud to be supporting this work to offer vital support to people severely affected by mental illness, helping them to improve their financial and mental wellbeing so they can ultimately have a better quality of life.’

The overall MaPS £94.6million investment in debt advice will support the delivery of 1.5m sessions of debt advice over the next 12 to 18 months.

This comes as MaPS expects the need for debt advice to increase by as much as 60% over the next year, particularly when support measures like payment holidays and a pause on credit collection activity come to an end.

It will also support Debt Relief Order administration, a critical debt solution for people on low incomes, via the Competent Authorities in England. MaPS started funding all DRO administration in England from October 2020.

As well as increased digital debt advice capacity and capability over the next 12 months, to continue to provide support to people remotely due to the pandemic.

And the ongoing Pilot of Adviser Capacity and Efficiency (PACE), a technology focussed pilot to simplify how people access and experience debt advice, while increasing efficiency.

Photo Credit – Pixabay

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