Debt and Gambling Harm – Changing the Legacy

The UK debt support charity StepChange is promoting this week (March 18-24th) as National Debt Awareness week, which seems to make it as good a time as any to talk about Debt and Gambling Harms.

When one think of harms caused through disordered and addictive gambling perhaps the one which comes most readily to mind is financial harm, and while we would be amongst the first to point out that harms experienced by those impacted by their own or another’s gambling go far beyond mere financial loss – such as relationship breakdowns, lost trust, poor mental and physical health, homelessness, unemployment, criminalisation, and even bereavement – it is undoubtedly true that debt and severe financial harm are common impacts experienced by so many of our network members.

What does perhaps need emphasizing is that while debt shouldn’t be seen as being of any greater significance in terms of harmful daily impact on individuals’ lives than the other adverse consequences mentioned above where it does often differ is in the length of legacy it leaves, and in the difficulties this then creates for individuals seeking to move on into full and sustained recovery.

If we were to ask you about what you were doing six years ago, who you were as a person, what your daily life looked like, who you were in a relationship with, where you were living, what job you may have had, and who the friends you hung around with were then there is a very strong chance that some, if not all, of these answers will no longer apply to you today.

It may even be a challenge simply remembering back to six years ago.

If it helps jog your memory, six years ago:

  • TikTok didn’t exist in the UK,
  • #MeToo was the trending social movement,
  • The UK media was obsessed with the upcoming wedding of Prince Harry and Meghan Markle.

All of which seem such ancient history – even if #MeToo is just as relevant today as it was then.

Yet, due to the way with financial institutes measure risk, and the now ubiquitous use of Credit Reference Agency records by almost every company deciding if you are a trustworthy person to do business with, your actions six years ago are just as meaningful and as damaging today as they were back when you were doing them.

And not just your own actions, in the cases of individuals impacted by a loved one’s gambling.

At the heart of RECOVERY is the need to accept the past but not to let it define your present and future.

Yet those who have experienced harms caused by gambling and who have been able to address the underlying cause and are looking to move on with their lives are not allowed by others to easily do so.

GLEN believes that the Financial Industry should be more forgiving of harms caused by factors out with individual’s control – or which were symptoms of an addiction driven lack of control which has now been successfully and demonstrably regained.

We believe the 6 year history requirement should be challengeable if presented with proof of successful treatment for addiction and rehabilitated financial behaviours as recovery from the diverse harms caused by disordered gambling is hard enough without having extra hurdles put in place.

While GLEN are happy to recommend StepChange as a valuable source of financial help for those facing debt issues due to harmful gambling impacts we are also keen to point out that they are not the only free and impartial source of  financial and debt advice.

We also are happy to recommend the National Debtline, MoneyHelper and local Citizens Advice centres.

The above resources are all either registered charities or official UK Government partners.

We would strongly advise against using “paid-for” services or any service which promotes itself as being “able to write off [80%] of your debt”.

Quite simply there is no need to do so when the recommended resources listed above do exist and are free to access. But please be cautious – there are many unscrupulous businesses who try to use names similar to the above trusted resources. Always make sure that who you think you are contacting is in fact who you wanted to contact.

The reason for this unscrupulous behaviour and the reason why there are so many private companies seemingly so willing to “help” those in debt is that the way in which debt relief products and schemes are organized and funded creates a lucrative business model for private companies. Sadly this can lead to the commercial value of offering particular debt solutions outweighing the considered needs of those they are supposedly helping.

This is something which many people do not realise until well into their arranged plans when they find that there is little progress being made towards paying off outstanding debt – due to high levels of fees being taken by the agent – or when discovering that there is no obligation to release individuals from “set length” plans if small print conditions exist allowing those administering plans to review term lengths.

Before committing to accepting any formal solution always ask how services are funded – e.g. if through commission / fees for IVAs.

Regardless of the source of advice please take time to consider if it is suited to your personal circumstances, especially where debt has been caused through the presence of harmful gambling.

Many debt advisory services have little understanding of gambling harms, and this can lead to advice being offered which while seeming to match the “on paper” needs of individuals can prove more harmful in the long term than other seemingly “less recommended” solutions.

The need to find a solution which ends daily pressures such as debt collection agency letters and phone calls right away can be very persuasive but you should always take a step back and consider the likelihood of your financial position (in terms of income/outgoings) being different in the near and medium term.

Hard as it may be to accept this at the time there can be situations where taking the less palatable option – including bankruptcy – may be better in the long term.

Debt and harmful markers stay on credit reports for up to six years.

Bankruptcy also remains on reports for six years, but can be a quicker route to financial recovery as most bankruptcies only last for one year before individuals are discharged. While bankruptcy is a serious financial red flag, and should be considered with great care if you have legal stake in a mortgaged property, it does stop creditors being able to chase you and it does draw a line under your unaffordable debts.  You may hear suggestions that where debt has been caused by gambling there may be extra penalties imposed, including extended years under administration, but this is not necessarily the case and it is also another area of financial policy where GLEN feels a greater understanding of gambling harm and appropriate routes to recovery need to be explored with those in regulatory and policy making positions.

The nature of any debt, including who it is with and whether is classified as being a “priority” debt (such as secured debts, mortgages, utility bills, council tax) or a “consumer credit” debt (such as unsecured loans, credit cards, and overdrafts) makes a big difference to the actions which can be taken against you to recover it. This has to be a factor when making your mind up about what to do next.

There is little point in paying off, or agreeing plans to pay off, non-priority debts if you also have outstanding priority debts which can have immediate consequences for not meeting – such as eviction, CCJs, or even termination of employment.

While we all feel obligations to make good on commitments to pay back monies which we have borrowed you must also recognise that the ultimate goal is to be in a position where you and your families are able to function normally and free from pressures which may draw you back into harmful coping methods – including gambling.

The simple truth is that you cannot be forced to pay non-priority debts if you do not have the resources to do so – and no-one can expect you to.

Most financial institutes view “credit” based debt as a form of gamble, which is why they place so much importance on Credit Reports in advance of lending. But they are also very pragmatic and see little value in keeping bad debt on their books, especially as they have accountancy tools which allow them to off-set “failed investments” – i.e. unserviced loans and credit cards – against other commitments. This means that once a credit account has been shown not to be a sound investment – such as through failure on the part of the borrower to make three successive instalments – most banks are happy to mark those accounts as being in default and to then “sell” them on at a “paper loss” to debt agencies – who also see them as being a gamble, but one with even less expectation of success than the selling institute had originally budgeted for.

This means that although you may feel guilt over not having met your commitments to the original lender that same lender has already quickly forgotten you. The acquiring debt collection business may try to exert pressure around your guilt to make you pay up but this is purely a “business” matter to them. Once a debt has been “sold” to a debt agency any perceived obligation between you and the original lender only really exists in your own conscience.

Debt agencies will try to make money on their “long shot” gambles, including threatening legal action to recover outstanding monies. If this happens to you then please do not panic and make unaffordable decisions. Legal action is a serious situation, although there is a world of difference between simply being “threatened” with legal action and that legal action actually being initiated.

If you do feel that you are at risk of legal action there are several useful resources and forums where practical and pragmatic advice are available. There may also be situations where threats are made even though those making them know that they do not have the documentation needed to enforce them in a court of law – this is particularly common where the debt is covered by the Consumer Credit Act 1974 and relates to an account which has been held for many years. For more information and helpful advice we recommend the forums run by Debt Camel and also Martin Lewis’ MoneySavingExpert.

It is also the case that some debts can become unenforceable – and even cease to legally exist in Scotland – after a set period of time if they have not been acknowledged or serviced. This can be a reason why after having heard little from a debt agency for some time you suddenly get an uplift in contact. They may realise that their window of opportunity for chasing you is running out and that it is worthwhile them trying a last attempt at getting you to pay them money.

We are not advocating that you should enter into financial agreements with little intention of honouring them, but what we are saying is that if you have found yourself unable to meet those commitments through consequences of unintended actions – including developing gambling addiction or being placed in debt by another’s gambling – then assuaging guilt should take a far lower priority in your life than getting yourself back on a sustainable financial footing.

Everyone who has battled through addiction understands the role which guilt played in keeping them needlessly locked into harmful addictive behaviours. A major and necessary step  towards sustained recovery is being able to put guilt behind you and to forgive yourself (and those around you whose actions caused you harm) for those past actions. In this respect debt should be seen as no different.

Always remember, while it may feel personal to you, it most certainly is not personal to those hoping to gain financially from your debt.