The general public has a perception that soldiers have secure well paid employment and do not have financial problems like the rest of society. Nothing could be further from the truth.The death of a spouse, divorce or separation, unplanned pregnancy, poor health, the loss of overtime or simply living beyond one’s means can trigger a financial crisis for soldiers and their families with an impact far greater than the general public realizes.
For a start, bankruptcy in particular can be viewed very seriously by the hierarchy in the Armed Forces and being adjudged bankrupt could seriously impair your promotional prospects and at worst you could be dismissed from the service. So in the event of being threatened with insolvency, the soldier should consider the full range of solutions available and bankruptcy should certainly be the last resort.
One alternative to bankruptcy is an Individual voluntary Arrangement (IVA). A more benign view is taken of members of the armed forces entering into an IVA compared to bankruptcy. This may be partly because there is not the same stigma attached to an IVA and partly because an IVA is deemed to be a genuine attempt to repay as much as possible to one’s creditors over a reasonable period of time. Whatever the reason, a soldier entering an IVA can have a reasonable expectation the he or she will not lose their job and there may be no negative effect on employment opportunities. Nevertheless, it is important to remember that retaining your employment is entirely at the discretion of the forces hierarchy, when you embark on any course of action to address your insolvency. If you are expelled from the armed forces because of your insolvency, re-admission is possible but unlikely, even after you have restored your financial status. The Ministry of Defence maintains a benevolent fund to assist those in financial distress and such assistance may be advisory and/or financial.
Whether you are already in the army or are considering enlisting and if your financial circumstances are such that you are threatened with insolvency, you would be well advised to seek independent legal advice as well as consulting with insolvency professionals. Alternative sources of advice are CAB and the CCCS.