The truth about bankruptcy
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Have you got a company loan? Find out what this means if you’re looking at a debt solution.
When you’re looking at a debt solution for your unsecured debts, you’ll need to take a careful look at how much you owe, and who you owe it to. That’s because some debts are considered to be more of a ‘priority’ than others as if you don’t pay them, it could have a serious effect on your life. This means you wouldn’t include them in your plan.
One example of this might be if you have a debt to your employer, like a company loan. You can sometimes include debts to your employer in your debt solution – it really just depends on what impact it could have on you if you do this. Read on to see what you need to consider if you’re in this situation.
What would the impact be?
If you’re applying for any debt solution and you owe money to your employer, you should seek advice from a debt advisor about this. In this situation, a debt advisor would be looking to work out what the impact on your life would be if you weren’t making your monthly repayments in full.
The best place to look for this is in your contract, any employee handbook or other policies from your place of work. Check to see what will happen if you don’t keep up with any employee debts – for example, if your job could be at risk.
It’s probably more likely that your employer would just hold the money back from your wages – though they shouldn’t stop your wages entirely – but it’s important that you check this to be sure. If you’re in any doubt, speak to your manager or someone from the HR department.
If adding your employee debts into a debt solution won’t have a negative impact on you or your job, you might be able to do this. But make sure you ask a debt advisor about what the best way forward would be – they can help you come to the right decision about which debts you need to include on your plan.
Which debt solution a debt advisor recommends to you will be influenced by what you tell them about your debts to your employer. For example, you would have to include all unsecured debts in bankruptcy but if you did this, it might put your position at risk. This would be one reason why bankruptcy might not be the right solution for you and in this case, a debt advisor would recommend a different solution.
Would your solution affect your job?
Even if you don’t owe any money to your employer, entering a debt solution could still have an impact on your job. This depends on your role and the debt solution you’re starting. For example, as bankruptcy is a formal debt solution, it can affect certain job roles. These are:
• jobs where you’re involved in financial matters like handling cash,
• if you’re an Insolvency Practitioner,
• if you’re the director of a company,
• if you’re a pub landlord,
• industries where you need a licence like law, accountancy or gambling,
• if you work for the police, or
• if you work for a security company.
As a Debt Management Plan (DMP) is an informal debt solution, it won’t affect certain job roles in the same way. But if you’re not sure whether your debt solution will have an impact on your job, seek help from a debt advisor or from a manager at your workplace.
When you speak to a debt expert to try and find a solution for your debt problems, they should ask you about your job. If you get in touch with us, for example, we’ll go through all aspects of your situation – from how much you owe, who you owe it to, how much you’re bringing in, as well as where you work. We’ll use all this information to recommend the best solution for your situation. And if it turned out that certain debt solutions will have an effect on your job, we would never recommend these to you.
You can also get free and impartial support from the Money Advice Service. And remember, no matter how difficult your situation might seem, there’s always a way to get back in control of your finances.
by Emily BancroftBack to blog home