No one likes to admit they are deeply in debt, and maybe so deep that creditors are getting serious about their collection efforts. In some professions credit troubles can literally end a career, especially in regulated and sensitive industries. People wresting with staggering debt loads or personal bankruptcy have to consider what might happen if their employer finds out. The time to deal with the problem is before the wage garnishment paperwork arrives, not after.
Consider the case of a stockbroker named Joseph. In 2010 two judgments were entered against him for over $31,000 in unpaid credit card debt. Brokers have to be registered with the Financial Industry Regulatory Authority in order to do business. The rules say Joseph had to tell both his employer and FIRA about the judgments, which he didn't do. His employer found out when the garnishment orders arrived. FIRA got the word after that. Joseph was fined and put under closer supervision. End of story? Not yet.
Unfortunately Joseph had more debt problems, about $54,000 worth, and four additional judgments. Regulators and his employer found out about them piecemeal, each time disciplining him a little more. Finally, Joseph was fired and his career as a stockbroker is probably over. This cautionary tale applies not only to the financial industry, it may apply to anyone who works in a position of trust or authority.
Federal law forbids an employer from firing an employee over a garnishment for one debt. But get more than one and the legal protection ends; the employer can terminate at will. Thinking of suing? Experts say it is hard to prove credit problems lead to a job loss and even if it is provable, debtors are not a protected class under anti-discrimination laws. Those facing default or considering bankruptcy would be well advised to explore the career consequences sooner rather than later.
Source: Time, "Debt can cost you your job," Martha White, Sep. 17, 2012