Bankruptcy is one of the most common debt solutions available to people struggling with their finances, however there is often confusion over how it could affect a person’s employment.
The choice to enter bankruptcy isn’t one most people take lightly and it’s important to ensure doing so isn’t going to have an unexpected impact on employment or housing
Some people may have an employment contract which states they aren’t allowed to enter bankruptcy, which is why it’s important to always seek advice.
Debt Support Trust is available Mon – Friday, 8am – 7pm and we would be more than happy to discuss your options.
Can I Enter Bankruptcy While In Employment?
The simple answer is yes, so long as they meet the criteria, however that doesn’t necessarily mean it’s the right solution for everyone.
One common misconception with bankruptcy is that debt will simply be written off, which isn’t necessarily true.
When someone applies to be declared bankrupt it becomes the job of the Official Receiver to recoup as much money for the creditors as possible. This could done via realising assets such as a property or applying an income payment order, typically for 3 years. In Scotland this could last for 4 years.
What Is An Income Payment Order
If someone is in employment and the official receiver decides they have a surplus income, based on expenditure guidelines, they will implement an income payment order.
An income payment order is a mandatory amount of money which has to be paid to the official receiver, who will then determine how the funds should be distributed.
Alternatives to Bankruptcy
When someone is in employment or has assets with significant equity, there may be additional options available to them other than just bankruptcy. This could be because of their employment contract, a surplus income or other factors which means they have to look at an alternative debt solution.
An IVA or Debt Management Plan (England, Wales & N.Ireland), Protected Trust Deed or DAS (Scotland), are alternative debt solutions which people may be applicable for. These solutions all have their positives and negatives, which is why it’s important to seek debt advice before making any final decision.
Get In Touch
If you’re unsure about whether bankruptcy is the right debt solution for you or if it will affect your employment, then we can help.
One phone call could clear up any doubts you may have and give you peace of mind about the route you’re taking to become debt free.
You can call Debt Support Trust on 0800 085 0226 or alternatively you can use our online contact form and we will call you back.