Disabled people face debts to pay for essentials

Special report

By Josephine Hocking

Disabled people are building up large debts to pay for essentials such as food and fuel, a new study has found. Clearing debt is difficult for many disabled people who have low incomes and high living costs, the research by charity Leonard Cheshire reveals.

The charity interviewed 51 disabled people facing debt problems. Most said creditors showed little understanding of the impact of their disability.
Nearly half felt lenders were unhelpful, inflexible and not prepared to negotiate alternative repayment arrangements.

The way disabled people with debts are being treated should be tested in court by the Disability Rights Commission under the Disability Discrimination Act, says Leonard Cheshire.

The average debt in the survey was £8,750 and amounts owed ranged from £400 to £52,000 (figures exclude mortgages) on credit cards, overdrafts and catalogues. Over half of the disabled people surveyed had income of less than £10,000 a year. 

Sixty three per cent of people interviewed had cut back on essential spending, most often food or fuel. More than 40 per cent said an unexpected one-off cost, such as replacing a broken cooker, bed or washing machine, contributed to their financial problems.

More than one in 10 said their debts had led them to contemplate suicide. Over one third had taken on further borrowing to deal with existing debt.

A further 400 disabled people – who do not have serious debt problems –  also contributed their views on debt to the report.

“Disabled people are being forced into arrears because they face additional costs related to their disability, yet are living on lower than average incomes.
For disabled people a significant amount of debt comes from essential purchases: food, heating and clothing, not luxury items. This leaves disabled people particularly vulnerable to spiralling debt, which they have little prospect of clearing,” said John Knight, Leonard Cheshire’s head of policy.

Slow and bureaucratic

According to the DRC, 49 per cent of disabled adults are not in paid work. Most of those depend on state benefits as their main or only source of income, government figures show.

“Managing on a low income is very difficult for the many disabled people who do not get the support needed to live with disability,” said Roy Webb, head of policy at the National Centre for Independent Living.

“Services provided by local authorities are failing to meet the needs of disabled people and are often slow and bureaucratic,” he said.

Many disabled people only get help with basic personal care, explains Webb. This inevitably leads to them forking out for services and equipment themselves, which can lead to debt,  added Webb.

One disabled woman interviewed said she avoided using her cooker and kettle because she dreaded fuel bills coming in and rarely ate hot meals.

Another young woman described how her world changed instantly after a motorbike accident left her disabled. She had to give up work and so did her husband, to be her carer.

“Like most young couples, prior to the accident we had a small amount of debt but it was manageable. After the accident the debts piled up. The bank hiked up the interest on our loan by 12 per cent, because they now considered us high risk borrowers,” she said.

Write off

Leonard Cheshire is calling for lenders to consider writing off debts where a customer’s change of circumstances due to disability means their finances are unlikely to improve.

The disability charity also wants to see more responsible lending. It says many creditors lack understanding of disability and staff training is required.

Lenders often wrongly count disability living allowance as disposable income when calculating how much to loan disabled people. The benefit is designed to fund the additional costs of disability and is not disposable income.

Leonard Cheshire wants a review of disability living allowance and incapacity benefit, to see if it should be increased. It criticises the benefits system for being slow, particularly when incapacity benefit and disability living allowance are withdrawn. Half of all claimants appealing against withdrawal of both benefits win their case.

The charity is also calling for reform of the Social Fund, so that more disabled people use it.

In the balance: disabled people’s experiences of debt, published October 2005, can be downloaded free at www.leonard-cheshire.org