Debt can affect many aspects of your life, but the last place you want to feel those effects are with the job. After all, if you lose your job, you won’t have any money to pay your debt. And if you lack money to pay your debt, options like credit counseling and debt settlement are out of the question. You may have to file bankruptcy then.
You Won’t Be Fired Just For Having Debt
In general, you can’t be fired for having too much debt, but it could affect your ability to get certain positions within the company. Some employers check your credit history before giving you a job or promotion to top-level management. Having too much debt could be viewed as an inability to manage and could cost you a promotion. If you’re applying for a job that deals with large amounts of money, your debt loan could cost you the job. Employers may think that if you can’t manage your own money well, you can’t manage the company’s money either.
Is Debt Affecting Your Job Performance?
If your debt begins to affect the way you do your job, your employer may have to let you go. For example, if you’re stressed about your debt and can’t handle the pressure of your job, you may miss important deadlines, be rude to customers, or fail to deliver what’s required of you. If you’re spending too much time at work dealing with debt issues, like calls from creditors and collectors, you’ll have less time to do your work and you could be fired.
In general, your employer will never know you have debt. But, if you have a wage garnishment as a result of a lawsuit judgment, your employer will find out. By law, you can’t be fired for just one wage garnishment, but if you have more than one garnishment, your employer can let you go.
Calls From Creditors and Collectors
Your employer may not allow you to take personal calls at work. Fortunately, the Fair Debt Collection Practices Act generally prohibits debt collectors from continuing to call at work (or anywhere else) after you’ve told them not to. The same law doesn’t apply to the original creditor, but often they’ll respect your request not to call you at work.
You may ultimately choose to file bankruptcy for your debt. If you make that decision, your employer can’t fire you for such filing. An employer who fires you because you filed bankruptcy is breaking the law. Your employer doesn’t get any type of notification that you’ve filed bankruptcy, even though you’ve listed their contact information on your bankruptcy filing. The only way an employer might know you’ve filed bankruptcy is if you tell them or they conduct a credit check. Employers are required to get your permission before checking your credit report, so that could be your chance to explain your bankruptcy.
The Bottom Line
In most cases, your debt won’t affect your employment, even if you file bankruptcy, settle your debts or have just one wage garnishment.