How Does Debt Affect Your Job?

Creditors may win the right to garnish your paycheck if you don't make your debt payments. At the very least, this means extra paperwork for your employer's payroll department, which will need to keep track of your deductions and forward regular payments to your creditor or face legal repercussions themselves. Even worse, it may lead your employer to view you as untrustworthy, something which will reduce your prospects for raises and promotions.

Creditors often phone late payers at work, particularly if they can't be reached during off-hours. The stress of dealing with these embarrassing interruptions can eat into your productivity. In addition, taking additional jobs or freelancing in order to make enough money to pay your bills can be exhausting and can negatively affect your performance on the job. And if you're losing sleep worrying about how to get out of debt, that will show up in your job performance too.

Debt collectors can contact your employer directly. While they can't reveal the nature of your debt, they can ask for information to verify your employment or determine if you have insurance. Some states even allow debt collectors to phone your employer if they don't receive what they consider to be a prompt answer to their written inquiries. Having debt collectors contact your boss is embarrassing and can potentially strain relations with your employer.

A growing number of employers now review credit reports as part of their background checks on potential new hires. Seeing a history of late payments, negotiated settlements, claims judgments or actual defaults can influence a personnel manager to choose another candidate for the job. Your debt may also hinder your job prospects by forcing you to accept any kind of job you can get quickly, just to be able to satisfy your creditors.