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How debt can affect your employment

Employment can affect how much debt you’re in. Some people who face employment issues such as being unemployed or working reduced hours may find themselves in debt due to having to borrow more to meet their expenses. However, debt may also affect your employment – one of the commonly asked questions about personal debts is whether debt will affect your employment or be communicated to your employer.

If you’re concerned about your debt, you can get in touch with us to discuss whether a debt consolidation loan would help your circumstances. Our advisors keep the information confidential and will not share this information with your employer.

We will look into some of the commonly asked questions about personal debts:

  • Will debt affect your employment?

  • Can debt payments be taken from your wages?

  • Can your creditors contact your employers?

  • What debt solutions are available to help, including debt management plans or IVAs?

How to find out whether debt will affect your employment

There are many different types of debt which you may owe, for example council tax arrears or debt from a payday loan. Whether or not these debts will affect your employment will depend entirely on your individual circumstances, but many lines of work may be unaffected by your debts. A good first step to understanding whether your debt will affect your employment is to make sure you’re clear on your employment status and know what is in your employment contract if you have one. Once you know the terms of your employment, this makes it easier for you to find out your rights and consider whether debts may affect your employment.

Can your creditor contact your employer?

According to Money, debt creditors are not legally allowed to disclose your financial situation to anyone else without your permission, this includes your employer, unless your debt is a business loan.

Can debt be recovered from your wages?

If you have debts, for example a bank loan or credit card arrears, creditors may seek a court order to take money from your wages, which is called an ‘attachment of earnings order’.

There are some circumstances where your creditors can’t apply for an attachment of earnings order. For example, if:

  • You owe your creditor less than £50;

  • You are self-employed;

  • You are not currently in employment;

  • You work in the army, airforce, or navy.

If these exceptions don’t apply to you and your creditor does let you know that they’ve applied for an attachment of earnings order or sends you the “replying to an attachment of earnings application” or “N56 form”, this means your creditor has applied to take money for your debts out of your wages. You should consider contacting your creditor straight away to discuss this.

You can also ask for help with your debt if you would like to consider a debt consolidation loan, which can be helpful if you are struggling with multiple payments and want to consolidate your debts.