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How to Know if Debt Will Affect Your Employment

A large proportion of people may now be facing employment issues, due to the fact the unemployment rate has risen, and many people's working hours have been cut. As a result, people have been finding themselves getting in debt to cover their usual expenses. Therefore, we may suggest that employment can affect how much debt you’re in – but can debt affect your employment directly? We often get asked if personal debts will affect your employment and if your employers need to be notified of it.

You can contact us if you are at all worried about your debt and we can advise you on whether an IVA would be right for your situation. All of your information will be kept confidential, and your employer will not be notified.

Find a Debt Solution

Let’s address some of the questions we are frequently asked about personal debts:

  • “Is my employment going to be affected by my debt?”
  • “Is it possible for debt payments to be taken from my wages?”
  • “What debt solutions are available to help me, including Debt Management Plans and IVAs?”
  • “Will creditors contact my employer?”

How to find out whether debt will affect your employment

There are a range of debt types that someone may owe, (e.g., Council Tax arrears, debt from a payday loan), but whether these debts will affect your employment is subjective to each individual situation. Although many areas of work tend to be unaffected by debts, you must fully understand your current employment before you will know if your debt affects it or not.

In order to understand if your debt will affect your employment, we recommend you start by clarifying your employment status and reading over your employment contract if you have one. Knowing your terms of employment makes finding out your rights, regarding keeping your debt private, much easier. It is then that you can begin to assess if your debts may affect your employment.

IVAs

Some career sectors, for example careers in law or the finance industry, may be impacted through the debt solution of Bankruptcy. This information can usually be found outlined in your employment contract; hence we recommend that you read your contract over before choosing this as a debt solution.

An IVA is a debt solution that allows you to make a formal agreement with your creditors and pay affordable payments – any funds left at the end of the IVA are usually written off. We will happily advise you on whether an IVA is right for you in your employment circumstance, so please do not hesitate to get in touch with us. All our advice will be tailored to you and your personal debts.

Discuss Your Debts With Us

Can your creditor contact your employer?

According to Money, debt creditors are not legally allowed to share your financial circumstances with anyone without obtaining your permission first, unless your debt is in the form of a business loan. This includes sharing your financial information with your employer.

Can debt be recovered from your wages?

In the case that you have debts, such as a bank loan or credit card arrears, creditors may seek a court order to take the debt repayments directly from your wages. This is called an “attachment of earnings order”.

However, there are some situations in which your creditors cannot apply for an attachment of earning order. For example, if:

  • you owe the creditor less than £50,
  • you are self-employed,
  • you are currently unemployed,
  • and/or you work for the army, air force or navy.

If these exceptions do not apply to you and your creditor sends you the “replying to an attachment of earnings form”, or an “N56 form”, or notifies you that they have applied for an attachment of earnings order, this means the creditor has applied to take your debt repayments directly out of your wages. In this case you should consider contacting your creditor to discuss this immediately.

Further reading