How can a debt arrangement scheme affect your employment?

The Debt Arrangement Scheme is a popular debt solution that can help debtors to repay what they owe in affordable instalments through a Debt Payment Programme. Backed by the Scottish Government, the DAS protects debtors from any legal action that would otherwise be taken by their creditors and gives them the opportunity to manage their liabilities whilst working to improve their financial situation.

Taking steps to deal with your debt is all well and good, but what if those same actions could have a negative impact on your job? This is one of the major concerns that is commonly expressed by those exploring their options for managing debt.

Read on to learn about whether the scheme could affect your job if your employer even needs to know, and whether it could have an impact on future applications.

Will the debt arrangement scheme affect your job?

The first thing to bear in mind is that the DAS is specifically designed for those debtors who have the ability to contribute a regular sum of money towards their debts. Unemployed debtors will not usually be eligible for the DAS, and creditors cannot be paid with money received from benefits (although those who receive child benefit or tax credits will not be prevented from joining provided that they have another regular source of income).

Although in most cases the DAS should not put an obstacle in the way of your job, certain careers are more likely to be affected. If you have a job with financial responsibility, for example as a solicitor, an accountant,  or where you act as a director of a limited company, joining the DAS may have a knock-on effect on your ability to carry on with your role. Similarly, those who work in the Police Force, Fire Service and Prison Service are often subject to strict financial vetting procedures which may prevent a debtor who is using the DAS from seeking or continuing employment within these organisations.

Whilst there are some restrictions, then, for the most part debtors can rest assured that the DAS is supportive of employment and unless you work in one of the professions outlined above, your job should not be affected by your use of this debt solution.

Could I lose my job if?

Unless you work in one of the roles highlighted above, being on the DAS is unlikely to affect your ability to work to the standard required by your employer and should therefore not leave you at risk of losing your job. When making the decision to terminate a person’s employment, companies are generally required to support their decision with clear reasoning and unless your employment contract includes provisions relating to personal debts, it could even be against the law for your employer to fire you on this basis.

It is worth remembering that you can only apply for the debt arrangement scheme with the assistance of a qualified money adviser, so if you do have concerns about the impact on your employment it may be worthwhile to raise the point with them at an early stage.

It is also a good idea to check your contract of employment if you are concerned about the impact an official solution may have on you.

Do I have to tell my employer that I am on a debt arrangement scheme?

Unless you work in a role with financial responsibility or in one of the industries which regulate professionals, it is unlikely that your employer will need to be told that you are on the scheme. If you are concerned about whether you need to disclose your use of any debt solution to your employer, you may find it useful to review the terms of your employment contract and seek confidential advice from your employer’s HR department, from a third party money adviser, or from a solicitor.

Keep in mind that, as with various other debt solutions, those debtors who are on the debt arrangement scheme have their names added to a public register and anybody can find your entry there, provided that they know your full name and date of birth. Whilst this is a worrying prospect for many debtors, remember that the DAS register also acts as a form of protection against Sheriff Officers who may otherwise wish to take recovery action against you.

Bottom Line

The Debt Arrangement Scheme provides Scottish debtors with a realistic approach to dealing with their debts, which could otherwise become unmanageable. It’s understandable that debtors are often concerned about the effect of debt solutions on their employment and future job prospects, but fortunately, the arrangement scheme is unlikely to negatively affect your ability to work unless you occupy one of the restricted roles covered in this article. You can see our FAQ section for more info about the scheme.

If you are still concerned, taking expert advice could be a useful step on your path to recovering from debt problems and it is widely available from qualified money advisers and even some charities across Scotland.