After doing thus, he started harassing me about the alleged debt and seeing no way out I resigned due to breach of confidence and privacy. Should the employer and creditor be now liable for my unemployment stage.

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You need to be very careful while you proceed with the issue. If you are working somewhere, you are required to provide some financial information about you and moreover, to keep the employee confidence intact. Even if your employer’s personal comments and treatments done to you are inappropriate, it’s not at all illegal.
The likely answer to your trauma might be to get another job and move on.

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