Debt & Employment

Debt & Employment

The effect of debt solutions on employment

This page should help you to decide whether a debt solution would be likely to affect your employment. It’s essential that you have a full understanding of any potential impact before you choose a debt solution:

Bankruptcy (including sequestration and MAP)

For most people, bankruptcy won’t affect their employment however, if you work in finance, law, property, or a role where you hold a personal license or are a member of a professional body, you should check your contract, check with your professional body, or contact your HR department to see if there will be any impact.

There are also some specific restrictions for people who are bankrupt.

Bankruptcy will:

  • Prevent you from acting as a company director without permission from the courts
  • Prevent you setting up or managing a limited company without permission from the courts
  • Prevent you from acting as the trustee of a charity
  • Prevent you from acting as a regulated professional, such as an accountant, where your professional body would disqualify you from membership
  • Prevent you from acting as an insolvency practitioner or an intermediary for debt relief orders
  • Cause personal licenses for roles within the gambling industry to lapse (Personal Management License and Personal Function License)

If you are a business owner:

  • Your business may be shut down, your employees dismissed and any assets sold
  • You can’t engage in business using a name other than the one under which you were made bankrupt without disclosing the name of the bankrupt business
  • If you’re a sole trader you can start trading again but won’t be able to obtain credit of more than £500 whilst you’re bankrupt, and will struggle thereafter whilst the bankruptcy appears on your credit file

Debt Relief Order

If you work in finance, law, property, or a role where you hold a personal license or are a member of a professional body, you should check your contract, check with your professional body, or contact your HR department to see if there will be any impact.

Also, whilst you’re subject to a DRO – for 12 months after the order is made – you can’t:

  • Set up a limited company or act as a company director without permission from the courts
  • Engage in business using a name other than the one under which your DRO was made without disclosing the name of the bankrupt business

IVA

An IVA won’t usually impact your employment, but if you work in finance, law, property, or a role where you hold a personal license or are a member of a professional body, you should check your contract, check with your professional body, or contact your HR department to check if there will be any impact.

Protected Trust Deed

A Trust Deed won’t usually impact your employment, but if you work in finance, law, property, or a role where you hold a personal license or are a member of a professional body, you should check your contract, check with your professional body, or contact your HR department to check if there will be any impact.

Debt Arrangement Scheme

A debt payment plan under DAS won’t usually impact your employment, but if you work in finance, law, property, or a role where you hold a personal license or are a member of a professional body, you should check your contract, check with your professional body, or contact your HR department to check if there will be any impact.

Debt Management

It’s very unlikely that a debt management plan won’t usually affect your employment however it will affect your credit rating, so you should check your contract or with your HR department to make sure that your role doesn’t require you to maintain good credit rating.