Armed Forces Personnel Debt Solutions

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This page is written specifically for those serving in the British Army, Royal Navy, and Royal Air Force. You can use a wide range of debt solutions, but some special factors apply.


To get expert confidential advice, please get in touch. Our qualified advice team will help you to put an effective debt plan in place.


Can Military Personnel Enter An IVA?


Most members of the UK’s armed forces can use an IVA to deal with their debts. If you live in England, Wales, or Northern Ireland, an IVA is one of your main debt solution options. However, this type of debt solution isn’t suitable for everyone working in the military. There are some job roles that could be negatively affected.


An IVA provides an opportunity to clear your debts over an agreed period of time. Usually lasting for five years, any unpaid debt gets legally written off once you complete the plan. Your monthly payment is based upon affordability, so you’ll have enough money to cover your bills and other reasonable expenses.


Disclosure to Chain of Command


Before you proceed with an individual voluntary arrangement (IVA) you must disclose your plan to your chain of command. This debt solution is a type of personal insolvency with legal status.  By disclosing your plan to your employer, you can check whether there’s any risk to your career prospects.


Why Does Your Chain of Command Need to Know?


Serious and uncontrolled debt can create vulnerability. It can affect workplace performance and reduce levels of trust. Your employer has a duty to control these types of risk. Chain of command disclosure is a major part of this risk control process.


There are comments about debt in A Soldier’s Values And Standards produced by the British Army. It includes the following statement, “Look after your money carefully, avoid uncontrolled debts and heavy gambling as this shows a lack of self-discipline and others may lose their trust in you”. Other employers engaged in sensitive work (like the police and prison service) employ similar risk control processes and require disclosure.


Will You Get Fired?


Debt will not generally result in the loss of your job. MoneyForce advises, “Formal Service action will only be taken in cases of persistent and irresponsible indebtedness. So it's better to seek help as soon as possible. Don't be embarrassed or ashamed to talk to your Chain of Command in the first instance. They will put you in contact with the relevant organisations that can help you”.


Debt issues are widespread throughout society. As well as overspending, modern employers understand that debt may simply result from bad luck, honest mistakes, or life changes. No employer wants to lose highly trained and experienced men and women.


What About Bankruptcy?


Bankruptcy is often perceived to be a serious way to deal with debts. MoneyForce writes, “Bankruptcy should be notified to your chain of command. Depending on the precise circumstances, this may have a severe effect on your career”.


An IVA is an alternative to bankruptcy. It creates a compromise between a debtor and their creditors. You pay what you can reasonably afford, and your creditors write off the remainder when the process is complete.


Debt Management Plan


Bankruptcy and IVAs are both formal legal insolvency processes. A debt management plan (DMP) offers you a less formal alternative. While it isn’t insolvency, it’s still expected that you disclose any intention to start a debt management plan.


You pay what you can afford towards your debts each month. The DMP provider negotiates reduced payments with your creditors and distribute your payments. They also ask your creditors to stop charging interest and adding other charges. No debt gets written off, so the plan continues until you have cleared your debts in full. This could be a good option if you can clear your debts within a reasonable period of time. It’s also sometimes used by people who own assets that might be lost in a formal insolvency.


Vetting & Security


Different military roles involve different levels of vetting. The vetting standards may be higher if your work is especially sensitive. Good personal financial management may be considered more important where additional security clearance is applied.


The vetting process may include checks on your credit report. This report will include detail about your debts, missed payments, arrears, and default notices. Insolvencies like an IVA are also recorded within your credit file. This record is kept on your file for a total of six years.


Military Recruitment


When you apply to join the armed forces, checks are made on your personal finances. They’re checking that you’ll be able to manage financially on a recruit’s salary. A high level of debt, or current usage of a debt solution, may negatively affect your recruitment chances.


Get Debt Advice


For confidential debt advice, please contact us today. Our qualified experts will review your options and tell you which debt solutions you can use. We’ll also explain the benefits and drawback of each of them. We’ve assisted many members of the armed forces and understand the additional obligations you have.



Author: Andrew Graveson

Qualified Debt Adviser & IVA-Guide.co.uk Founder


Page Last Updated: 24/04/2020


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