Facing and Overcoming Debt in Addiction Recovery
Overcoming debt in addiction recovery can be incredibly challenging. It is hard for most people. However, the physical and psychological effects that addiction can have on you will make it that much tougher. The expenses and often lack of earning potential involved in recovery can further exacerbate this.
Debt is one of the most stressful things you can go through (perhaps beaten only by addiction recovery!) Around half of us experience stress and anxiety over bills, living expenses, and, ultimately, debt. Stress over finances can freeze you, overwhelm you, and make it hard to see a way out or plan for the future.
This is even more the case for those going through addiction recovery.
Overcoming debt in addiction recovery can aid your mental and physical wellbeing. By getting onto a reasonable, manageable repayment plan, and then by getting out of debt, eventually, you will benefit from greater financial confidence, improved mood and morale, decreased stress, and ultimately a brighter future.
And many going through addiction recovery sorely need this brighter future.
The cost of addiction: It all adds up
Addiction often negatively impacts your finances. This makes debt in addiction recovery all the more common.
One of the first signs we often see that someone is struggling with a substance use disorder (SUD) is an inability to conduct themselves at work or school. During severe addiction, the substance a person is abusing becomes their main priority, overshadowing everything else. It can be hard to maintain a job. It can be hard to stick to a balanced budget.
Obviously, this will often result in debt or financial concerns. Your earning potential begins to dry up even as you need to keep finding money for drugs or alcohol.
This only becomes worse as tolerance to the drug grows.
Some data has been compiled in the US on the cost of various drug addictions on the user. These are the cash costs in the moment, not taking into account lost earnings over time, healthcare expenses, and so on. However, they highlight how much money the average person with addiction will need to find to finance their habit, needless to say it all adds up.
Many people in addiction struggle with facing up to bills. Letters don't get opened or are read and put aside. The fear of facing bills that cannot be paid can be overwhelming. However, in recovery, everything has to change, and that means facing the people or companies you owe money to.
This is a scary prospect, you may not even know how much money you owe. You may be fearful of contacting debtors. This is all perfectly normal but this fear needs to be overcome.
Overcoming debt in addiction recovery
Luckily, there are some fantastic options for those going through debt and addiction recovery.
Firstly, at least in the UK, there is a lot of medical support to be gained from the NHS and local authorities. This is a good thing. According to the National Institute on Drug Abuse, treatment for drug addiction, for instance, reduces associated health and social costs ‘by far more than the cost of the treatment itself’.
In short, they pay for themselves. For example, in the US, a year of methadone treatment costs just shy of $5,000 on average. This compares with $24,000 for the cost of imprisonment. Society is beginning to realise this.
Many people going through addiction recovery will also qualify for disability benefits to help put some money in their pockets, making their finances far easier.
It is possible for many people to work during recovery. Outpatient rehabilitation often enables this. You can fit your treatment around your work schedule, so that you can earn during your recovery.
However, this is often only appropriate after intensive inpatient rehab, and often is not practical for many recovering addicts.
It is always worth speaking to your local healthcare provider about the services on offer in your area. Your local addiction groups may be able to point you to sources of support that are available. The local Citizen’s Advice Bureau will be able to advise you of what your rights, responsibilities, obligations, and options are. There will be a very good chance that they will be able to help you to consolidate your debts into something far more manageable.
How to tackle your debts in addiction recovery
There are two approaches to taking on your debt, broadly speaking. Both focus on helping you to repay your debts, though each takes a different emphasis.
The first is the ‘avalanche’ approach. Here, you prioritise paying off the loans, credit cards, and outstanding bills that have the highest interest rates. This will save you money in the long run, as they won’t be able to accrue as much interest. Overpay those debts with the highest interest rates whilst making minimum payments to everything else.
The second way, the ‘snowball’ approach, almost reverses this. Here, you go for the smallest debts first. Focus on clearing them completely, whilst paying minimally towards your larger ones. This way, you are able to go after debt after debt, snowballing as you clear each one.
These are only two ways. There are plenty of ways to approach clearing your debt, however. It is always worth taking advice from an impartial expert when determining which route to take. If in doubt, speak to your local Citizen’s Advice Bureau. They will be able to help you work out a clear path that will work best for you.
As above, they will very likely be able to help you to consolidate your debts into something far more manageable, or at least help you work out a payment method that is practical and reasonable.
Further to this, I would suggest three pieces of advice for anybody looking to overcome their debts as they go through addiction recovery.
Advice for overcoming debt in addiction recovery
Firstly, as with addiction recovery, the first step is always admitting the problem. Avoidance will only make matters worse.
It is helpful to get out all the paperwork you can find on your debt or debts, your income, and your outgoings and figure out what needs paying. The basic payments you will need to make will include your loan and credit card repayments, your bills, and any other essential costs.
Make a repayment plan. You can liaise with sources of support to do this. The company you need to repay will also advise you of the minimum repayment that they will accept. Figure out how much of each bill you can pay each month and commit to making these payments.
If your income doesn’t meet these, again, take advice on trying to consolidate your debt. Other options may be changing your lifestyle, selling any assets you have, or even filing for bankruptcy as a last resort.
You also need to make a sort of hierarchy of debts. Not all are equal. If you can, I would suggest going with the avalanche approach. Try to pay off your higher interest debt first, then your non- deductible, low-interest debt, then finally any tax-deductible debt you have.
Keep one line of credit open. This means one credit card. Cut the others up, throw the pieces away, delete their numbers from all your devices, and begin paying them off. If you can, live only on your income, with no debt incurred at all.
This should be your day-to-day debt repayments sorted. If your income allows, you will be paying it off without incurring any more. If it doesn’t, you can explore the other options mentioned above.
Your credit rating
You then want to check your credit rating. This will likely be low if you’re struggling to pay off debts. Luckily, it will rise very quickly as you begin regular repayments.
Go to either Experian, Equifax, or TransUnion for your own personal credit rating.
You will also be able to see if there are any inaccuracies in your report, and what patterns of poor behaviour there have been. See which accounts are most drastically, most negatively affecting your credit score. You only need to miss a few payments, or make them late, for it to badly damage your credit score.
Try not to do this. Prioritise these accounts, make sure you stay on top of them, and track your credit score as it rises over time.
Debt needn't hold your recovery back
It can take some people many years before they become financially solvent. This is especially true of those with large debts in addiction recovery. However, as long as you are honestly facing your debts and doing your best to overcome them, you will sleep so much better at night. Knowing they are being taken care of in one way or another will give you peace of mind.
More often than not, it pays to be completely honest with the people you owe money to. Tell them you suffer from addiction but that you are doing your best to put things right. Many people are surprised at the positive response they receive when they are transparent with their creditors.
- Options for dealing with debt: https://www.gov.uk/pay-off-debts
- Government debt help schemes and solutions: https://www.stepchange.org/debt-info/pay-off-or-reduce-debt/government-debt-advice.aspx
- What to know about snowball v avalanche methods of paying down debt: https://www.wellsfargo.com/goals-credit/smarter-credit/manage-your-debt/snowball-vs-avalanche-paydown/