Do You Need to Tell Your Employer About Your IVA?

If you’ve considered entering an IVA agreement, you probably have a few questions, not least of all whether you must tell your employer of the situation. This is a common concern. Will it affect your job? Will your employer find out anyway? Could telling them help or hurt your situation?

This article explains how an IVA works and whether and when your employer might need to know about it. It will guide you through the information employers might see, practical steps to take, your legal rights, and how to handle workplace conversations. By the end, you should have enough information to decide the best approach for your circumstances.

What is an IVA?

An IVA is a legally binding agreement between you and your creditors. An Insolvency Practitioner (IP) arranges the IVA and will manage the IVA payments. A debt repayment plan will be proposed based on your income and essential costs. When they receive your plan, your creditors will vote on whether to accept it.

If 75% of the creditors accept the proposal, the IVA becomes binding on all unsecured creditors. You will then make agreed monthly payments to the IP, who will distribute them to your creditors.

Any qualifying debt that remains unpaid at the end of the IVA term is generally written off. IVAs are a bankruptcy alternative. They offer a debt relief option if you can afford some payments but cannot repay all your debts.

Setting up an IVA

Here, in simple terms, is how an IVA is set up:

• You consult an Insolvency Practitioner (IP) who assesses your finances and prepares a proposal.
• The IP sends the proposal to your creditors, and they vote. If enough creditors accept, the IVA is approved.
• Once approved, you make IVA payments monthly. The IP handles creditor contact and distributes funds. Your name is entered on the Insolvency Register.
• The IVA repayment plan lasts for the agreed term. You must keep your side of the bargain or risk failure and possible bankruptcy.

What is the Insolvency Register?

The Insolvency Register is a public list of all individual voluntary insolvencies and bankruptcies.  The idea behind the register is to offer transparency of financial actions that have resulted in legal consequences. It is open to all businesses and members of the public, so your creditors, your employers and others can find the details of your IVA on the Insolvency Register if they so wish.

Why worry about telling your employer?

There are several reasons people worry about employers discovering their IVA:

• Job security: They may fear being dismissed or penalised.
• Reputation: Employees may worry about the stigma. Many prefer to avoid awkward questions from colleagues or managers.
• Privacy: Many people would prefer to keep personal financial matters away from work.
• Practical concerns: They may wonder whether the HR department will become involved with the repayment plan.

What IVA information can an employer see?

Most people overestimate how much information their employer will discover by default. Employers do not automatically receive notices when you enter an IVA. The creditors and IP also do not inform your employers when you start an IVA.

What employers might receive in some cases:

• An attachment of earnings order (AEO): Only a county court or magistrates’ court can order an attachment of earnings. This usually follows a judgment for unpaid debt. IVAs are creditor agreements, so court-ordered AEOs are separate from IVAs. Most IVAs do not involve an AEO, but if the IVA fails and a creditor obtains a county court judgement (CCJ) and then an AEO, they may require your employer to deduct monthly amounts from your wages.
• Pension or salary deductions for some liabilities: If you have court orders, a pension attachment, or student loan deductions, these may be communicated to payroll. IVAs generally don’t change those processes unless you request payroll involvement.

Your legal rights at work and employment protections

No law prevents employers from dismissing an employee because they have an IVA. However, you are protected from discrimination or unfair treatment based on your financial status. 

Points to bear in mind:

• No automatic dismissal for IVA: Entering an IVA is not illegal. In most cases, employers cannot dismiss you simply because you have an IVA. The exception may be where an employment contract or professional requirement demands financial stability.
• Fair dismissal process: Any employer that plans to take disciplinary action must follow fair procedures. Unfair dismissal rules apply.
• Regulated roles and financial probity: Certain jobs, such as regulated financial services roles, may include certain financial rules. These may require employees to disclose significant financial issues that directly affect suitability for the role. Financial misconduct or insolvency practitioner involvement could be relevant in roles where financial trust is essential to the position, or where the employer’s regulator mandates disclosure.
• Data protection and privacy: Personal financial information is subject to data protection rules. Employers should handle any sensitive information with care, sharing only what is necessary and only with the employee’s consent.

Should you tell your employer about your IVA?

Whether to tell your employer depends on your work circumstances. Here are some guidelines for when to tell your employer,:

1. You don’t have to tell your employer if:

·        Your role has no disclosure requirements.

·        There is no risk of court orders or employer involvement.

2. You should tell them if:

·        Your employer’s policies or your employment contract requires disclosure of insolvency practitioner actions or financial difficulty.

·        You expect creditor action that could result in payroll attachment orders.

3. Consider telling them if:

·        You may need some time off to consult a debt advisor and sort out your personal insolvency.

·        You want help and support, or would like to understand workplace policies.

·        You worry about the reputational impact and want to control the narrative rather than waiting for the word to spread via any rumours.

How to prepare if you plan to tell your employer

If you decide to tell your employer, be prepared and keep the conversation professional.

• Know your rights: Understand your employment contract, company policies on financial disclosures, and whether your role has regulatory reporting duties.
• Talk to your IP first: Ask your IP what information your employer will need.
• Keep the discussion factual and limit it to the required information: You don’t have to share every personal detail with your employer.
• Request confidentiality: Ask HR to treat the matter confidentially and limit knowledge of your debt repayment plan to essential people. 

You may need to include the following people in the IVA disclosure discussion:

• Your line manager: Only involve line managers if you need practical adjustments, like time off, or if your employment contract requires you to. 
• Small businesses: In small workplaces where there is no HR, you may have to speak to the business owner directly.

What if your IVA fails?

If you miss payments and the IVA fails, creditors can pursue other options. These might include CCJs, which could lead to an AEO. If this happens, your employer will have to deduct payments from your wages via the payroll. That is why many people prefer IVAs as a managed route to debt recovery. Your creditors view consistent payments as proof of your commitment to the agreement. If you fear failure, talk to your IP and consider alternative arrangements before missing payments.

How an IVA might affect workplace checks and security clearances

Certain roles require disclosure of a bankruptcy or insolvency practitioner to employers or regulators. The roles most often affected by disclosure rules are typically financial. Those who may be vulnerable to organised crime and bribery, such as the justice system, government employees, may also have disclosure rules.

If you work in a regulated industry, check your professional rules. Jobs in the following areas may demand disclosure:

• Financial services: Employers may carry out checks and have policies on staff with insolvency practitioner issues. You may have to disclose an IVA if your role involves financial probity, handling client money, or accessing financial systems.
• Security clearance: Some public sector or defence roles require reporting of financial difficulties, as these may be considered vulnerable to coercion.
• Professional bodies: In certain regulated professions, you must report any insolvency practitioner arrangements to your regulator.

Handling workplace consequences and potential discrimination

Most employers will handle financial disclosures professionally and confidentially. Consider these steps if disclosure has unfavourable consequences for you:

• Seek HR advice: Seek clarity on any decisions and find out whether they relate to your IVA. Request that the employer explain, in writing, the reason for any action.
• ACAS and employment rights: Follow internal grievance procedures if you believe you face unfair dismissal or discrimination. If the problem is not resolved through this process, contact the Advisory, Conciliation and Arbitration Service (ACAS) for advice.
• Legal counsel: Seek legal advice if you face a serious case of unlawful discrimination or dismissal.

Practical tips for employees considering an IVA

• Get independent financial advice: Talk to a regulated insolvency practitioner before committing to an IVA. The debt advisor can explain your alternatives and help you to decide whether an IVA is your best route.
• Budget realistically: Ensure you can meet the IVA payments, taking account of all your living costs. Overstretching risks failure.
• Keep communication open: With the IP and creditors. The IP can negotiate short-term relief if your circumstances change, but will need prompt information to do so.
• Organise your paperwork: Save your IVA proposal, acceptance letter, and monthly payment confirmations.

When to get professional help

If you’re unsure whether to tell your employer, or are worried about professional duties and disclosure rules, seek tailored money advice:

• Talk to the Insolvency practitioner arranging the IVA: They know the practical steps and can advise you about typical employer responses.
• Contact a debt advisor for independent guidance and alternatives.
• Consult HR or a trusted manager confidentially to learn about workplace policies.
• For regulated roles, ask professional bodies or compliance officers what counts as required disclosure.

Weigh up the Trade-offs before Disclosing Your IVA

You do not have to tell your employer about a voluntary insolvency, and most people prefer to manage it privately. If, however, you hold a regulated role with disclosure rules, you may have to tell your employer. Weigh the trade-offs between privacy, convenience and professional obligations before divulging the existence of the IVA to your employer.

With good planning and honest communication when required, an IVA can help you tackle your debt while protecting your job and supporting your long-term financial recovery. Contact My Debt Plan for free debt advice.