NEWS
Defaulting on debt could leave you without a job
If you're struggling to meet your financial commitments, the last thing you want is to lose your job. If your primary source of income disappears, money problems can quickly spiral out of control, with potentially grave consequences. But, for many people there is a very real risk of being dismissed if they get a County Court Judgement (CCJ) or become bankrupt.
Increasingly, employers are including clauses in workers' contracts which stipulate that they can be sacked if they get a CCJ, for example. A CCJ is a debt repayment order imposed by a county court judge, and can be sought by any creditor, or any organisation owed money for things like parking fines, for instance. Once the debt is paid off, the CCJ can be wiped from an individual's record.
The Guardian recently reported on a case where a female worker had to keep a CCJ secret from her employer. Her problems started 4 years ago when her marriage fell apart and she was made redundant - she failed to make a payment on her credit card for 6 months. The credit card company eventually took her to court and obtained a CCJ, requiring that she paid back £8,000 over 2 years. By this stage, she was back in work, and was happy to set up a standing order to pay off the debt.
A few months later, she was headhunted by another company offering better pay and benefits. She accepted the offer, but when she came to sign her contract, she noticed that CCJs and bankruptcy were included as reasons for dismissal. A friend working in employment law advised her not to mention her existing CCJ to the employer, and she eventually left the company to set up her own business without them ever finding out about it.
Employment lawyer Fraser Younson said: "Unless someone is in a position of financial responsibility then there is no reason why they should have such a clause in their contract. Should someone get dismissed because they have a CCJ, they can contest the decision on the grounds of reasonableness." He added, however, that whilst someone dismissed for this reason could contest the decision at an employment tribunal, "they would have to hire a lawyer, and if they are having financial troubles they wouldn't have the money."
Obviously, the best solution is to avoid getting into debt problems in the first place. If you find you are unable to make the monthly repayments on a loan or credit card, you should seek advice from a debt management specialist as soon as possible.
Increasingly, employers are including clauses in workers' contracts which stipulate that they can be sacked if they get a CCJ, for example. A CCJ is a debt repayment order imposed by a county court judge, and can be sought by any creditor, or any organisation owed money for things like parking fines, for instance. Once the debt is paid off, the CCJ can be wiped from an individual's record.
The Guardian recently reported on a case where a female worker had to keep a CCJ secret from her employer. Her problems started 4 years ago when her marriage fell apart and she was made redundant - she failed to make a payment on her credit card for 6 months. The credit card company eventually took her to court and obtained a CCJ, requiring that she paid back £8,000 over 2 years. By this stage, she was back in work, and was happy to set up a standing order to pay off the debt.
A few months later, she was headhunted by another company offering better pay and benefits. She accepted the offer, but when she came to sign her contract, she noticed that CCJs and bankruptcy were included as reasons for dismissal. A friend working in employment law advised her not to mention her existing CCJ to the employer, and she eventually left the company to set up her own business without them ever finding out about it.
Employment lawyer Fraser Younson said: "Unless someone is in a position of financial responsibility then there is no reason why they should have such a clause in their contract. Should someone get dismissed because they have a CCJ, they can contest the decision on the grounds of reasonableness." He added, however, that whilst someone dismissed for this reason could contest the decision at an employment tribunal, "they would have to hire a lawyer, and if they are having financial troubles they wouldn't have the money."
Obviously, the best solution is to avoid getting into debt problems in the first place. If you find you are unable to make the monthly repayments on a loan or credit card, you should seek advice from a debt management specialist as soon as possible.