Do I have to tell my employer that I’m in debt?
There is no hard and strict rule that explicitly details every employee who’s in debt must inform their employer or there would be a queue of people outside of HR’s door after every Christmas.
Having said that, there are some professions where debt may become an issue. An existing or new employer has the right to perform any due diligence to confirm that you do not have a County Court Judgement -CCJ- or are Bankrupt.
In Bankruptcy, you are put on a NIL Tax Code so it may become obvious to your employer that you are Bankrupt. There are also other ways your Employer can become aware of your Bankruptcy when performing their due diligence.
CCJs are for outstanding debt, and any organisation can apply for one – whether it’s for small amounts such as a household bill or larger sums like a personal loan. If the judge finds in the Creditor’s favour, the borrower is obliged to pay the debt. However, if the debt is paid off in full within thirty days, the CCJ will not show on your credit file.
If it takes longer than thirty days for you to pay the outstanding debt off, your CCJ will appear on your credit file for 6 years which is mostly how a CCJ is identified.
Most employers don’t have restrictions that are aimed at their employees in debt. Some employers, however, have clauses in their contracts which state that employees who have a CCJ against them or are Bankrupt can be at risk of discontinuation of their employment.
Mostly in specific professions that involve the handling of money, such as working in a Bank or as an Independent Financial Advisor, debts as well as going Bankrupt, could result in you being dismissed from employment.
Some positions require you to be a member of a particular regulatory body that may involve terms that hinder those who have a CCJ against them or are Bankrupt from retaining their membership. This can have a huge knock on effect on your financial prospects, so if you think your employment is at risk and notice you are getting into debt, talk to us about our pre-insolvency options before making decisions that could greatly affect your employment status.
One important thing to remember is that you’re not alone there have been plenty of people who fell into debt but are now thriving. With our professional guidance, you can plan, approach and settle.
Why not check out our earlier blog where we assess whether or not your job is at risk when considering bankruptcy: