Yikes — When Debt Costs You a Job

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Down Sizing at the Office

Unpaid credit card debts can cause a whole host of headaches, from annoying collection calls all the way to wage garnishment. In the case of this one borrower, though, his debt situation snowballed so badly it cost him his job. 

Lawyer and Forbes.com blogger Bill Singer writes about stockbroker Joseph Tarnofsky who, in 2010, had judgements entered against him for wage garnishments in the amounts of $21,721.17 and $10,957.66 over unpaid credit card debts. This was news to his employer, AXA Advisors, which only found out when they got the documents requesting the garnishments, and this was bad news for him.

Brokers have to be registered by the Financial Industry Regulatory Authority, and this body has strict rules when it comes to disclosing circumstances like this. Basically, Tarnofsky was supposed to tell both his bosses and FINRA that he was in legal hot water over his unpaid bills. He was fined, placed under tighter supervision, and life went on.

Except the red ink didn’t stop there. Like many debtors, Tarnofsky owed money to more than just a couple of creditors. Six months later, AXA found out about four more judgements against him for unpaid credit card bills totaling nearly $54,000. “[E]ach action arose after the firm took internal action against Tarnofsky for the first two actions,” Singer notes. At this point, AXA had enough and gave him the boot a couple of months later.

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Singer points out that Tarnofsky probably kissed his career goodbye, as well, since his settlement with FINRA for not disclosing the other four court cases included a provision that has the practical effect of barring him from the industry, most likely for good.

Granted, most of us aren’t stockbrokers and aren’t mandated to dish our financial dirt to regulators. But most of us would still be at risk of termination in a case like this. Although Federal law prohibits companies from firing workers over wage garnishment on a single debt, more than one garnishment and all bets are off.

Some states offer more protection, but Amy Traub, senior policy analyst for nonprofit group Demos, points out it can be difficult for workers to prove that debt or credit issues are responsible for a job loss, and the law’s scant protection might make that a moot point anyway. “An employee who is fired because of debt may not be able to do very much about it,” she says. “They have little legal recourse because debt status is not a protected category under federal anti-discrimination law…Unless somebody is working under an employment contract that’s really protecting them, they are an at-will employee.”

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