It has been well-documented for decades now that financial stress can and frequently does take a significant toll on the mental health of debtors. We have published articles on this subject over the years (see below), as we know first-hand how momentous this impact can be on personal guarantee debtors being pursued, particularly when individuals must simultaneously manage the loss of a business alongside several personal guarantee demands; not to mention the loss of income and the strain it can put on a family.
In the four years after the 2008 banking crash, we had a number of client suicides as there was no safety net – the ‘breathing space’ Debt Respite Scheme for Mental Health introduced in 2021 has gone some way to addressing this issue, providing much-needed respite periods in critical cases.
Previous related articles:
Mental Health Awareness and Financial Wellbeing (23/05/2022)
If you cannot cope and/or are having suicidal thoughts … (02/09/2021)
Personal Guarantee Claims and Mental Health (28/06/2021)
Debt Respite Scheme (Breathing Space) (18/06/2021)
However, whilst the above safety net has helped reduce the number of circumstances that lead to extreme outcomes, its presence can – in the eyes some of some creditors- lessen the importance of treating non-critical mental health issues with the appropriate level of regard, and consequently pursue PG debtors with more vigour than would be considered reasonable. Yet these vulnerable circumstances can so easily become critical if not enough care is taken.
The result is a widening of the gap between those cases where statutory respite applies, and the majority of less critical personal guarantee cases which are still vulnerable and require care and consideration.
An initiative which appears to go some way toward bridging this gap, is the Money Advice Trust’s ‘Debt and Mental Health Evidence Form’ (“DMHEF”). Originally launched in 2008 by the Money Advice Liaison Group, this form has since undergone four considerable revisions with input from a wide array of both medical and financial stakeholders.
The existence of this form appears to be a well-kept secret, for in seven years of its existence, we have only recently for the first time had a creditor approach us with this form- and we have had plenty of clients with less critical mental health issues that could have benefitted from such a mechanism during the last seven years.
The DMHEF is set-up to be completed by the debtor’s medical professional, and is accessible to any and all health or social care professional who knows the individual, their health condition, and needs.
It provides clarity for all involved as to the circumstances.
We are hopeful that this initiative can be utilised to encourage creditors to more seriously and carefully consider the guarantor’s needs and adopt a suitable approach to work with, rather than against, their symptoms and condition when pursuing an alleged PG debt. We intend to make use of the form with our personal guarantee clients who are in this position, but still want their debts dealt with in a way that is appropriate to their health circumstances.
Creditors, health and social care professionals, and debtors can find out more about the scheme at:- Debt and Mental Health Evidence Form | Money Advice Trust
