Dear Debt Adviser,
I am 23 years old and $15,000 in debt. I have several questions. One, why would an employer want to fire you because of garnished wages? How would that affect them? Also, I am slowly paying off credit cards from four years ago. I have not touched my student loans yet. Is there somewhere I can view my credit activity for free? Any advice is appreciated. Thanks for your time!
You are employed, healthy, youthful and educated. If you lack for anything, it is experience and maybe a bit of perspective. You’ve come to the right place. To answer your first question, there are a number of reasons the garnished wages would be viewed negatively by an employer. One, you might be distracted and unproductive at work due to your financial troubles (studies show this to be true). It might also be viewed as a risk to have you around cash or things that might disappear mysteriously. You may be viewed as unreliable or lacking good character because there is evidence that you don’t honor commitments, such as repaying what you owe. And last, your employer now has to deal with a court order and bother the payroll people.
But despite all this, an employer may not fire you due to one wage garnishment. It is unlawful under the Consumer Credit Protection Act. But be careful. If you have more than one garnishment, the employer may fire you.
I’m glad to hear you are working on paying off your credit card debt. My guess is that any wage garnishment you may currently have is from that. The quicker you pay old credit cards bills off, the better. More importantly, do not accumulate any new debts while you are paying off the old ones. If you are currently “extending” your income with credit cards, stop immediately or you’ll never get in control of your finances.
Your student loans need to be addressed soon. They will follow you forever — except in very few circumstances where they can be discharged in bankruptcy due to a severe hardship — and can get very expensive if you reach the point of default. My hope is that you have been deferring payment on your loans and are not in default. Be sure that you know when you must begin making payments and the amount. Then, budget accordingly.
To answer your last question, about a free credit report, you can get free copies from each of the three major credit reporting bureaus — Equifax, Experian and TransUnion — at AnnualCreditReport.com once each year. Go to the website for each bureau to learn how to read the information contained in your credit report and how to dispute any inaccurate information.
Once you get this garnishment behind you, to be successful in your financial life you need to do these three things:
- Save money for emergencies. You eventually want to have six to 12 months’ of living expenses tucked away.
- Spend less than you earn. Just as eating everything you could get your hands on would wreck your health, binging on debt will ruin your finances.
- Insure your life, car, home and health. You are approaching the age when your sense of immortality will begin to wear off. When some bad stuff happens, the right insurance will be your Iron Man suit.
Ask the adviser