Uncaring creditors plunge disabled into a sea of debt

Disabled people are drowning in debt because they have high living costs and are being hounded by unsympathetic lenders.

Leonard Cheshire, the UK's largest disability charity, has found the average household debt of those with a disability is £8,750. The actual amounts owed by those surveyed ranged from £400 to a horrifying £52,000, including mortgage arrears but excluding mortgages. Yet more than half of those in debt are on an income of under £10,000 a year, compared to the national average of £24,752.

'Lots of disabled people who are in debt have borrowed money as a result of the extra costs they incur through their disability' says Claire Kober, policy and campaigns manager at Leonard Cheshire. 'Many have taken out credit cards to pay their fuel bills and their mobility costs, for example. They are also far more likely to live on low incomes and be dependent on benefits.'

The charity believes that disabled people's experience of debt is frequently different from that of non-disabled debtors and that lenders fail to recognise this.

'Creditors' scant knowledge of disability is often most apparent when it comes to negotiating a financial statement or repayment plan with a disabled client,' says Kober. 'They frequently fail to recognise that some disability benefits are not intended to provide disabled people with disposable income, but to cover the cost of equipment or services required because of an impairment. Such a misunderstanding can result in a creditor perceiving a disabled person to be in a stronger financial position than is the case.'

Leonard Cheshire will present a report on disabled people's experience of debt to the government's all-party disability group on Wednesday. The report will show that almost half of those disabled and with debts feel that their creditors have been unhelpful and lack an understanding of how disability might affect an individual's life. Some have potentially breached the Disability Discrimination Act, which requires service providers to change any polices, practices and procedures that may discriminate against disabled people.

One participant in the study says: 'I have a problem where my jaw dislocates and I can't speak. Yet although I've explained this to my credit card company they won't give me a fax number which would allow me to get in touch when I'm experiencing this and can't talk.'

The charity is calling on the Disability Rights Commission to test such credit and debt issues under the act and will also begin lobbying creditor trade associations to provide their members with a greater understanding of the impact of disability on an individual's financial situation.

The charity will also be asking the government to reassess the level of incapacity benefit paid, which currently averages £84 a week, and will be asking for better and quicker decision making throughout the welfare benefits system.

It says that one group with particular problems are those faced with the sudden onset of a disability. A recent study showed that one in three people leaves paid employment within a year of the onset of a disability and suffers an average 29 per cent drop in income.

Claire Holdstock, 25, found herself even worse off. In 2003, shortly after the birth of her first child, she and her husband Adrian were knocked off their motorcycle when they were hit by a car travelling on their side of the road. While Adrian escaped with a broken foot, Claire suffered a leg injury which kept her in hospital for eight weeks and has since left her on crutches with no chance of a full recovery.

At the time of the accident Claire and Adrian were both working full time and had debts of about £8,000 on top of their mortgage with no repayment problems. But the couple have since stopped work as Adrian has become the full-time carer for Claire and their young daughter, Maileigh.

The couple went to their bank, a high street name they have been with for 20 years, to see if they could reduce their £120 monthly repayments on their personal loan while they awaited money from their insurance claim.

'They agreed to reduce our monthly repayments from £120 to £85 but said they would have to change the interest rate on our loan from 7.4 per cent to 19.5 per cent as we were now considered high risk. They then took away our Switch cards for the same reason. The mortgage lender refused to reduce our monthly repayments from £101 even though the income support for mortgage interest we receive doesn't cover the full interest on the mortgage.'

The couple now owe an additional £5,000 to friends and relatives on top of their original debts. 'I acknowledge that I took the loans out and fully expected to repay them,' says Claire. 'But the accident wasn't our fault and we are being penalised at every step.'