Many people in the UK are facing up to the reality of their debts and making brave decisions on how to combat them.  One of those decisions is to file for bankruptcy. Many of those people filing for Bankruptcy are worried about one thing more than any other.  They are worried about losing their job because of Bankruptcy.

So if your employer finds out about your bankruptcy…will you be sacked?

If you cannot afford to pay your debts and declare yourself Bankrupt and then lose your job because of this, it just makes the problem worse and it’s like kicking you while you’re already down.

There’s no certain Yes or No answer as to whether you will lose your job but you should be aware that for the majority of people in the UK, going Bankrupt has absolutely no affect on their current jobs.  There are off-course a few exceptions such as jobs in the banking and finance industry.

If you are unsure you can have a private chat with your HR department or you can review your employment contract to see if there is any reference made to bankruptcy.

So apart from your current job, will will going Bankrupt prevent you from getting a new job?  In most instances, it will not affect you being hired for a job.  However you should be aware that some employers in the UK do credit checks on new employees as a part of the hiring process.  Employers have the right to decline your job application based on your credit rating.

This is currently very popular in the USA but not that many employers in the UK do credit checks on new employees.  Although, as mentioned previously, for jobs in finance poor credit can be a big problem.

If you are already in a job, your employer does not automatically get told if you go bankrupt.  Your  employer may be able to figure out that you are bankrupt, by the Official Receiver changing your tax code.  Your tax code may be changed to a NT or no tax, code.

So lets look at the worst case scenario…You have a job in the banking or finance sector…Your job security may be at risk if you work in this sector and are Bankrupt.  There are some finance jobs where you will be immediately dismissed for being bankrupt.  To be certain you would need to check with the company’s HR department and confirm what the potential consequences are.

So unless you work in the banking or finance sector, losing your job is not something you should be concerned about if you are applying for Bankruptcy.

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Today we are going to answer one of the hundreds of email queries we get every month.  Its a bit of a cheeky question but we have had many similar ones so we think its best to put the record straight.  The question relates to taking out credit when you know you can’t pay it back with the view to taking out an IVA or filing for Bankruptcy…

I have around 30k in un-secured debt that I have racked up over the last 5 – 6 years.  I’m at a stage now where it looks like I will not have any realistic chance of paying the money back.  I seem to be putting more and more on credit to pay of credit.

I am considering taking out an IVA or filing for Bankruptcy.  So what I’m asking is, can I take out a personal loan, and spend on my credit card and then go bankrupt or go on an IVA?

John , Manchester

John, what are you thinking?  This is definitely not a solution and may be considered fraud.  If you take out lots of credit right before bankruptcy, chances are the official receiver will interpret this as being fraudulent.

Knowing you are insolvent and cannot afford to pay your debts and taking on more credit, is a form of misuse of credit.  If you are found out to be doing this you can receive a BRO or Bankruptcy Restriction Order.

When a court imposes a BRO it will subject the debtor to restrictions for period of time between 2 and 15 years.

The restrictions that are put in place are the same restrictions that all bankrupt people in the UK will experience during bankruptcy. The difference being that the BRO will lengthen the time that the bankruptcy restrictions are in place.  These bankruptcy restrictions are usually in place for around a year from when a person files for bankruptcy but instead of being lifted when the bankruptcy is discharged, these restrictions can last for well over a decade!

If you do any of the following before applying for Bankruptcy in the UK then chances are you may get a BRO:

* Buying a Holiday on credit
* Raking up excessive gambling debts
* Buying expensive gifts for another person on finance
* Purchasing a computer or expensive games console on finance

As a rule, If you think it may look bad, then it will look bad when it comes to justifying your spending to the official receiver..

I have seen many people in the UK pay for their holidays on credit, then apply for Bankruptcy thinking they will still keep the holiday. I wont lie to you, some of these people have managed to get away with this but financial activity such as this is highly inadvisable.

The same goes with paying for your Bankruptcy fees with credit. You should not do this.  Your Official Receiver will assess this and they may well view this negatively.

Its not quite as official when its comes to an IVA but the same sort of rules apply.  If you rack up large credit card balances and apply for an IVA, you may expect the finance company to vote against your IVA application. Finance companies can vote against an IVA and if you have taken out a lot of debt and then applied for an IVA, then they are likely to vote against your IVA proposal.

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