Question

Thank you for taking my question, my situation is slightly different than most people in debt. I owe my employer £5,000, in addition to 2 credit cards, and some old business loans I have from years ago. I am paying them all, and so far on time, but I have no money left over after being paid and it is really stressing me out. It is affecting my mental health.

My question is about going bankrupt, if I go bankrupt what can my employer do and can I include the loan from my employer?

Answer

Hi,

Yes, your situation is slightly different from many people in debt due to the fact you owe your employer money.

I have just a few questions to help clarify things:

Knowing these details will aid me in providing specific advice, but in general terms if you owe £20,000 or more, and have no assets, you could consider bankruptcy.

If you have less than £20,000 and no assets, you could consider a Debt Relief Order or DRO.

The issue or “wild card” here is your employer. Depending on the terms and conditions of the loan, and also your employer’s temperament, they could sack you right away. However, while not an ideal way to do things, you may be able to include the debt in a bankruptcy or DRO and still repay that loan.

That is more of a legal issue, and you would need to seek legal and professional insolvency advice. Preferring a creditor outside of an insolvency proceeding is more than frowned upon. This also begs the question about the agreement between you and your employer.

If including the loan would cost you your job, then paying them back may be allowed.

This is where speaking and getting professional insolvency or legal advise is needed.

Then again there is the option, you include your employer’s loan in an insolvency proceeding, they sack you, and you don’t care, or you quit the job.

It can depend on your relationship with your employer, and also your job.

Let me know how you get on with this, and what you decide to do.

Regards,

Jon

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