I am a professional person, will it affect my position if I do an IVA?

An IVA is often the best option for professionals

We receive a lot of calls and emails from the public asking; "I am a professional person, will it affect my position if I do an IVA?"

Please note that for professional people such lawyers, accountants and bankers, bankruptcy are not a viable option to deal with debts because bankruptcy can potentially limit your employability it would seem prudent to investigate these other options before deciding to declare.

Professionals who run into financial trouble typically opt for an IVA because if they choose bankruptcy they are not allowed to be involved in promoting, forming or managing a company without the permission of the court. They are also likely to lose professional accreditation if they work in careers, such as accountancy.

Quick Guide on Professional rules on going bankrupt or choosing an IVA

Profession: Barrister – Can not act whilst bankrupt so an IVA is preferable
Profession: Chartered Accountant - Can not act whilst bankrupt so an IVA is preferable
Profession: Member of Parliament (MP) - Can not act whilst bankrupt so an IVA is preferable
Profession: Local Authority Official - Can not act whilst bankrupt so an IVA is preferable
Profession: Justice Of The Peace (JP) - Can not act whilst bankrupt so an IVA is preferable
Professsion: Police or Armed Forces – Bankruptcy can severely hinder their career and promotion prospects so an IVA is the better option
Profession: FSA Registered - Most jobs in the financial sector can become untenable if you are declared bankrupt so an IVA is preferable

If you are considering entering into an IVA, then it would be wise to check with the professional organisation that you are a member of first, to see if this will have an effect on your accreditation.

Likewise in certain jobs, being in an IVA can be contrary to the terms and conditions in your contract of employment. Make sure you check this to see if you would be affected.

Accountancy, Legal and Financial Profession rules on doing an IVA

The Institute of Chartered Accountants in England & Wales (ICAEW), as the largest regulator of licensed Insolvency Practitioners and Accountants in the UK states that IVAs have some clear attractions for debtors compared to bankruptcy. They carry less stigma than bankruptcy, for example, and do not affect the individual’s ability to work as an accountant, barrister or solicitor. They are also less public, as they are not advertised in the press.

What are the implications in terms of employment in the securities and Investment sector?

Even if someone has become personally bankrupt and wishes to work in the area of securities and investment, they may still be able to.It is possible to trade again immediately, as your bankruptcy has been discharged, but you do have to disclose this fact to the Financial Services Authority (FSA) in the Approved Person Application (Form A).

You will be asked for details in the form, such as whether it was a solvent or insolvent liquidation, or if you've ever been the director of a company, if so was it as an executive or non executive directorship, what the Liquidators Report said of your responsibility for the liquidation, any responsibility you had for finance there and whether the new role will require you to handle client money or assets. The FSA will then make its own checks and decide whether you are "fit and proper" for the new role.

This may sound daunting but there are a lot of Approved Persons who were the subject of bankruptcy or an IVA or directors of failed companies.

No one, however, can work as an Approved Person while being an undischarged bankrupt, but the FSA does sometimes approve people who have made a formal or informal agreement with their creditors. They don't normally like to do this if the bankrupt person was the senior manager or a large shareholder in a regulated company.

Working as a sole trader or in a partnership and doing an IVA

If you are a sole trader or in a partnership you will, most probably, have your assets such as your house sold off to pay back creditors. An IVA is often a better option as your reputation may be damaged.

The Idea of doing an IVA whilst running a business is that you can show the IVA business creditors that your business is viable and that the business can continue to pay off the business debts and survive the IVA.

The average business creditor without insolvency knowledge will panic when they find out about an IVA and so close the business credit facilities. This action will be triggered by a letter from your insolvency practitioner. This will obviously make the business very difficult to operate. To avoid this happening either open a new business account with a new supplier or call your business creditors in advance and change your account to "cash only".

Professional status upon IVA conclusion

Once an IVA (Individual Voluntary Arrangement) has been completed, you will be issued with a statement of satisfaction showing that you have fulfilled the requirements of the IVA.

The Insolvency Practitioner will also notify the required authorities and it would be in your best interest to contact the various credit reference agencies, to notify them that you have made a full and final settlement of your debts by completing the IVA. This can then be added to your credit file for anyone to see, should they have need to check it.

If you are a professional person and are worried about your position with an IVA please complete the following form or telephone freephone 0800 074 6918.

IVA Knowledge Base Menu

ENQUIRY FORM

Name

House Name or No.

Postcode

Email address

Telephone

Mobile

Best time to call

Amount of debt

Employment Status

Are you a home owner?
Yes | No

Other Info

I accept the privacy policy:

We will get back to you soon!

IVA's

The IVA Guide
Money Advice Direct has put together an IVA Guide based on the enquiries and questions that we receive at our helpline offices.

In the guide we cover such subjects as IVA Approval, early settlment of your IVA, missed IVA payments, IVA failure, additional debt claims and much more.
[click here for IVA Guide]

What is an IVA?
The IVA is an extremely powerful tool enabling you to clear your debt and return to a clean financial bill of health. Visit Money Advice Direct's Guide to Individual Voluntary Arrangements (IVAs).
[more...]

Debt Analyser

We can help you decide the best option to start clearing your debt.

Complete the form and get answers now.

I am a professional person, will it affect my position if I do an IVA?

An IVA is often the best option for professionals

Quick Guide on Professional rules on going bankrupt or choosing an IVA

Accountancy, Legal and Financial Profession rules on doing an IVA

What are the implications in terms of employment in the securities and Investment sector?

Working as a sole trader or in a partnership and doing an IVA

Professional status upon IVA conclusion

IVA Knowledge Base Menu

ENQUIRY FORM

FREEPHONE DEBTLINE

IVA's

BANKRUPTCY

CREDIT REPAIR

DEBT ADVICE FACTSHEETS

DANGER

MIS-SOLD PPI HELP

Debt Management Plans

Individual Voluntary Arrangement (IVA)

Bankruptcy Advice & Support

Debt Advice for Scottish Residents

Mortgage Help & Advice

Claim Unfair PPI & Credit Card Charges

Business Rescue Service

Budget Calculator & General Debt Advice