AAT and Bankruptcy

Enterprise_Warrior

If an AAT member had to file for bankruptcy and informed the AAT, would that member be disqualified from the AAT?

A purely hypothetical scenario but I was curious on the answer as I believe that if a member ended up being made redundant and was unable to find a job and had to default on their mortgage, that member should not be penalised by the AAT. With Brexit happening, it could end of being a situation for many accountants as jobs are scarce and competition is high even now.

What are other peoples thoughts?

Bertie

I don't believe you can be a student / member whilst you're actively bankrupt.

I, again only from memory- bankruptcy lasts for one year, I know it stays on your credit file for 5/6 years.

Buried within the rules this is covered somewhere!

Bertie

Snippets

https://www.aat.org.uk/summary-policy-bankruptcy-and-criminal-convictions

Enterprise_Warrior

My argument against the one year ban though would be the fact that accounting bodies are creating the competition in the market that results in this situation. If there are more members than jobs then this situation could easily be reality.

I know from past experience that it is really hard to get work in another industry when you have spent a long time in accounting as you either lack the experience of senior roles or employers are too afraid to put you in junior roles in case you jump ship when you find another role in accounting.

I know that there is that stereotype of people saying that you shouldn't be an accountant if you can manage to get yourself in that situation, but everybody is entitled to buy their own home and car etc and you can't live life thinking that you could lose your job any second.

Bertie

Nobody is without sin.

AAT_Team

I ran this by our Professional Standards team for you. Please see below our policy on this.

If you refer to AAT’s Insolvency policy – it specifies what happens in this scenario (paragraph 24+25).

AAT’s general position in respects to insolvency is as follows:

11. AAT members must manage their financial affairs properly at all times to promote public confidence in the accounting profession. Being insolvent can indicate serious failures and call into question a member’s competence in the handling of client financial affairs. Clients and employers rely on AAT to consider whether an applicant is a fit and proper person to be a member, whether applying to be a student, affiliate, associate member, full member or fellow member.

12. Insolvency is a risk indicator, raising a question whether an individual is a fit and proper person to enter the profession. AAT has a robust approach to assessment of the fit and proper status of applicants who disclose they are, or have been, insolvent.

A member must communicate a change in circumstance within 30 days of it occurring and in relation to personal insolvency, specifically with Bankruptcy and Debt Relief Orders, membership will automatically cease.

@Enterprise_Warrior – we appreciate your respects to circumstances etc. and if there are any extreme or exceptional reason why bankruptcy was entered in to (i.e.: serious illness) then the member could re-apply and the application would be assessed accordingly.

Generally AAT’s stance in respects to personal insolvency on application is as follows:

13. AAT will not, under any circumstances, approve an application for membership from an applicant with an undischarged bankruptcy or Debt Relief Order, for which the moratorium period has not expired.

However, in the interest of fairness we would look to assess the application under our membership criteria policy (para 13 for MAAT and 16 for FMAAT), which emphasises:

If an applicant does not demonstrate that he or she meets the requirements… their application will be rejected, unless AAT considers it would be unfair to do so.

Hope this clarifies things. Many thanks.

AAT Team

Enterprise_Warrior

Thanks AAT Team for clarifying.

As expected, there is no consideration for members who fall on hard times as a result of redundancy and difficulty in finding new employment. To avoid bankruptcy, you must not commit to borrowing at all and therefore cannot be subject to bankruptcy proceedings.

Bertie

Well there is - just not during the moratorium period. Seems fair to me.

You can neither be a Director during the same period.

Enterprise_Warrior

It's just scary how quickly this scenario can happen. You have a low level of debt, you get made redundant, you struggle to find work as employers have thousands of candidates to choose from, you run out of savings, you fall behind on debts, creditors issue CCJs and on top of that, the AAT remove your membership. After all that hard work with the exams, you potentially may not be allowed to be a member again.

Even if you can't be a director, you can still register as a sole trader.

Enterprise_Warrior

I am interested to hear stories from members who have been through this and became members again.

Enterprise_Warrior

Completely agree