Debt while Sectioned under Mental Health Act

RFMS

Hi

I have a relative who has been sectioned under the mental health act. He has been detained for about 4 months now and he is so worried about his debt.

He took out an unsecured loan about 2/3 years ago for ~£10,000 and now has no money or equity whatsoever, he is detained in hospital and has no ability to work to pay it back. I wish I could help but I don't have the means to do so.

He became ill before he took the loan out but refused at the time to get medical help, it wasn't until 4 months ago when the police thought he was a danger to himself they decided to detain him.

He has recently called his bank and they have put him on low payments but he is now realising he will be in hospital for a long time and unlikely to be able to get well enough to work for a much longer timeframe.

I have asked him to look into a Debt Relief Order as an option to consider. But he doesn't know how to look into this. I don't either.

The bank have now said he should get a Debt and Mental Health Evidence Form (DMHEF) completed by the doctor and they said it might be able to write his debt off. But I'm unsure if this is what he is hoping for, or if this is true, he is very confused.

Can anyone advise what the DMHEF might achieve?
Is a DRO appropriate in this case if he has no money at all? and if so, how do you organise this?

Thank you

seanavfc92

RFMS wrote: »

Hi

I have a relative who has been sectioned under the mental health act. He has been detained for about 4 months now and he is so worried about his debt.

He took out an unsecured loan about 2/3 years ago for ~£10,000 and now has no money or equity whatsoever, he is detained in hospital and has no ability to work to pay it back. I wish I could help but I don't have the means to do so.

He became ill before he took the loan out but refused at the time to get medical help, it wasn't until 4 months ago when the police thought he was a danger to himself they decided to detain him.

He has recently called his bank and they have put him on low payments but he is now realising he will be in hospital for a long time and unlikely to be able to get well enough to work for a much longer timeframe.

I have asked him to look into a Debt Relief Order as an option to consider. But he doesn't know how to look into this. I don't either.

The bank have now said he should get a Debt and Mental Health Evidence Form (DMHEF) completed by the doctor and they said it might be able to write his debt off. But I'm unsure if this is what he is hoping for, or if this is true, he is very confused.

Can anyone advise what the DMHEF might achieve?
Is a DRO appropriate in this case if he has no money at all? and if so, how do you organise this?

Thank you

Is the £10k loan his only debt?

As far as in aware, to be eligible for a DRO you need to have between £0-£50 surplus, debt total not exceeding £15k, and assets not exceeding £300 ( not too sure if that last one is right so don't quote me).

RFMS

seanavfc92 wrote: »

Is the £10k loan his only debt?

As far as in aware, to be eligible for a DRO you need to have between £0-£50 surplus, debt total not exceeding £15k, and assets not exceeding £300 ( not too sure if that last one is right so don't quote me).

Hi - Yes it seems that the 10k loan is his only debt. Although interest has been accumulating on it, but we are confident it has not gone over the 15k mark total.

He has no assets at all.
His outgoings are just about covered by his income support. But we are having to buy him clothes so I guess he literally has nothing left over.

dancingfairy

If the bank have said that they may be prepared to write the debt off then it may be worth pursuing.
Can you get hold of a form or letter from a doctor and then write to the bank and ask them to write the debt off?
As you have identified the other options is to apply for a DRO. This normally costs about £90 I think and has to be done through an approved provider. I believe the CAB can process them but there must be others. It might be worth phoning one of the debt charities for help and advice if you want to go down this route?
Also does he not have access to specialist advice such as a social worker who can arrange for him to get debt advice? He can't be the only one who has debts and mental health issues.
df

longtermplanner

The Lending Code (http://www.lendingstandardsboard.org.uk/docs/lendingcode.pdf) para 241 onwards talks about how lenders should manage debtors who have mental health problems and refers to a DMHEF.

If he has been detailed for four months, then he should indeed get a DMHEF and ask for the debt to be written off. This is one or the rare circumstances where a lender will sometimes agree to this.

If they lender doesnt agree to write off the debts, they will almost certainly freeze interest and charges. In which case the debt could just wait until he is in a better position mentally to look at it again. At that point a DRO may be appropriate.

If you feel the stress of this debt is contributing to his mental difficulties, then it may be worth pursuing a DRO now. He can call National Debtline and talk to them about it, they can organise DROs.

National_Debtline

Hello there,

You can find out more about the DMHEF form and supporting information here: http://www.malg.org.uk/debtmentalhealth.html

If you would like to have further help and support please do consider getting in touch. We can support and advise people on behalf of third-parties.

Very best wishes,

David @ National Debtline.