Debt is a part of life for many people, but the impact it can have on your job is often overlooked. Knowing how debt can influence your employment is important. This guide looks at how debt can affect your career, including how it could stop you from getting a job, affect your current position, and even impact your partner’s career.
Can debt prevent you from getting a job?
Yes, debt can stop you from getting a job, especially in certain fields and roles where financial stability is key. Employers in the financial services industry, for example, often run credit checks on potential employees. A poor credit history can suggest financial instability, raising concerns about your ability to handle money or sensitive financial information responsibly. Similarly, jobs in the police force or other security-sensitive roles may require a clean credit report to ensure you’re not vulnerable to bribery or financial pressure.
Employers look for signs of financial irresponsibility that could be risky for their business or reputation. Late payments, defaults, or large outstanding debts could be red flags that hurt your chances of getting a job.
Can debt impact your current job?
Debt can affect your current job, especially if your financial situation gets worse. Some professions require you to report significant debt issues or the use of debt management solutions like an Individual Voluntary Arrangement (IVA) or a Debt Management Plan (DMP).
For example, employees in regulated sectors, such as finance or legal services, may need to inform their employer or regulatory body about financial difficulties. Not disclosing this information can lead to disciplinary action, including being fired. Jobs that require high-security clearance might also conduct regular credit checks. A worsening credit report could result in losing your clearance and your job.
Furthermore, financial stress can affect your job performance. Constant worry about debt can lead to decreased productivity, lower job satisfaction, and even health problems, all of which could jeopardise your position over time.
Can an IVA affect my current job?
An IVA is a formal agreement with your creditors to pay off your debts at an affordable rate. While it helps manage and clear debt, it can impact your job.
In some professions, especially in financial services, having an IVA might be problematic. Employers could see an IVA as a sign of poor financial management, which is concerning if your role involves handling money. You might also need to inform your employer about your IVA, and this disclosure can affect your standing at work.
Certain job contracts might require employees to maintain a good credit status. Entering an IVA could break these terms, leading to potential disciplinary actions or even losing your job.
Will a Debt Management Plan affect my job?
A DMP is an informal arrangement to pay off your debts through a debt management company. Unlike an IVA, a DMP isn’t legally binding but can still affect your job.
Most employers might not worry about a DMP, but they may if you work in the financial sector or are employed in a role that requires high levels of trust. Like an IVA, you might need to disclose your DMP to your employer, which could affect their view of your financial reliability.
Stress from managing a DMP could also affect your job performance. Reduced focus, increased absence due to financial stress, and overall decreased productivity are indirect ways a DMP might impact your current job.
Can Bankruptcy affect my job?
Bankruptcy is a serious financial situation that can significantly affect your career. Declaring Bankruptcy means you legally can’t repay your debts, which can have wide-reaching effects on your employment.
In some professions, especially those involving financial management, Bankruptcy can lead to immediate dismissal. Employers might see Bankruptcy as a sign of poor financial judgement, which is problematic in roles requiring financial oversight.
Bankruptcy can also restrict you from holding certain positions, like being a company director. It might also make it harder to get future jobs in your industry, as potential employers could view Bankruptcy as a big risk.
For more information on IVAs and Bankruptcy, see What Is the Difference Between an IVA and Bankruptcy.
Can my debt affect my partner’s career?
Yes, your debt can impact your partner’s career in certain situations. If your partner works in a field where financial stability is crucial, like finance or law, your financial troubles might raise concerns for their employer.
For example, if you and your partner apply for a joint mortgage or loan and your credit history is poor, this could affect their financial standing and creditworthiness. Employers who do regular financial checks might see this negatively, especially if your partner’s job involves financial responsibility.
For more information, see Will an IVA Affect My Partner.
Protecting your career from debt
Debt can significantly impact your career, affecting everything from job prospects to current employment and even your partner’s career. It’s important to manage your finances responsibly and seek professional advice if you’re struggling with debt. Understanding the potential effects of debt on your career can help you take steps to protect your job and overall financial health.
If you’re looking for free debt advice, you can get in touch with MoneyHelper. If you’d like to speak with an expert advisor at MoneyPlus about debt management solutions, you can speak with one of our friendly team today.
