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IVA or Bankruptcy – Part 3

In the second article in this series, we looked at the effects of insolvency on the careers of people working in the financial sector and particularly accountants.

In this article we will look at the effects of insolvency on members of the Armed Forces and of the Metropolitan Police.In particular, we will look at the two most frequently used financial remedies – Bankruptcy or an IVA.  

If you wish to enlist as a member of the Armed Forces and be employed by the Ministry of Defence, you may not do so while being undischarged from bankruptcy proceedings. You should disclose your financial status in any application to join the Armed Forces. The Ministry of Defence will give due consideration to your attitude to discharging your debts. If you have ever been declared bankrupt, you are required to disclose this fact.  If you are in an IVA or have ever been, you should also disclose this fact.

If you are already a member of the Armed Forces, you will not necessarily lose your employment if you are declared bankrupt or enter into an IVA. However, bankruptcy in particular can be viewed very seriously by the forces hierarchy and being adjudged bankrupt could seriously impair your promotional prospects and at worst you could be dismissed from the service. A more benign view appears to be taken of serving members entering into an IVA rather than becoming bankrupt. Nevertheless retaining your employment is at the discretion of the forces hierarchy. If you are expelled from the armed forces, re-admission is possible but unlikely, even after you have restored your financial status. The Ministry of Defence does maintain a benevolent fund to assist those in financial distress and such assistance may be advisory and/or financial.

Police forces across the country take similar views as the Armed Forces do, in regard to entry of insolvent persons into the profession and to serving members becoming insolvent. While discharge from this service is not mandatory for members who are bankrupt or in an IVA, police will examine the circumstances and may in their discretion expel the insolvent member. If an insolvent member is expelled, re-admission is again possible but unlikely. This body also maintains a benevolent fund but gives only advisory assistance.

Both bodies view an IVA less seriously than bankruptcy so it is not surprising that insolvent members choose to enter an IVA more frequently than they opt for bankruptcy. A serving member of the police or Armed Forces who becomes insolvent may consult with the trustees of the benevolent fund and consider taking independent legal advice before making what could turn out to be a career threatening decision. A reputable insolvency practitioner will also provide invaluable advice on all the available options open to members of both bodies. Such advice should be provided free of charge. Alternative sources of advice are CAB and the CCCS.

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