Can I Obtain a Security Clearance if I File Bankruptcy?

Security clearance is an essential qualification for a military career. Without it, promotion may be difficult and service members may be removed from their assignments if they are unable to achieve and maintain proper security clearance. Blake Goodman, PC, Attorney assists military personnel with financial problems every day. If you have questions about military service, security clearances, and debt, contact our office for confidential and candid legal advice from our bankruptcy security clearance lawyers in Honolulu.

Do Financial Difficulties Hinder a Security Clearance?

A 2006 memo with the subject “Implementation of Adjudicative Guidelines for Determining Eligibility for Access to Classified Information” from the Department of Defense (DOD) outlines the reasons why financial difficulties may be cause for denial or revocation of security clearance:

“Failure or inability to…meet financial obligations may indicate poor self-control, lack of judgment or unwillingness to abide by rules and regulations, all of which can raise questions about an individual’s reliability. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds.”

The memo then proceeds to list financial factors that may pose obstacles to achieving clearance, including:

  • Inability or unwillingness to pay debts
  • Debt caused by irresponsible spending
  • A history of not meeting financial obligations
  • Embezzlement, theft, and check fraud
  • Failure to file tax returns
  • Unexplained affluence
  • Evidence of gambling problems

Some factors that are not listed as concerns include:

  • Low credit scores
  • Debt negotiations
  • Bankruptcy

You read that correctly — debt negotiations or a Chapter 7 or Chapter 13 bankruptcy is not a reason for denial of security clearance.

In fact, military personnel are more likely to be denied a security clearance if they have unmanageable debt and have done nothing to fix the problem. Servicemen and women who are honest about their debt situations and demonstrate efforts to fix the situation will be in a better position to achieve or maintain a security clearance than individuals who do nothing to address their financial difficulties.

How Can I Address Financial Difficulties?

If you are in this situation and don’t know what to do, then giving those of us at Blake Goodman, PC, Attorney a call might be what you need. Not only can we help you with your final decision, but we can give you peace of mind about your situation.

The stress debt puts on the mind can be monumental. It does more than just impact your finances — it changes every decision you make in life. Grocery shopping? You wonder if you can afford what you are paying for. Car troubles? You worry that you are going to have to take out a loan that you can’t pay back.

Nobody should have to deal with this kind of stress, and that’s what we at Blake Goodman, PC, Attorney are here to help you with. We can help you erase that debt, take the necessary steps towards getting back into a positive financial situation, and eventually be in a situation where you feel great about your finances. For many, however, the first step is the most difficult — and that is accepting they need to file for bankruptcy.

Far too many people wait too long to accept that they need to file for bankruptcy, and instead spend years allowing debt to cripple them.

Bankruptcy Will Not Ruin Your Life

A huge misconception about bankruptcy is that it will ruin your life. You will never receive a security clearance, you will never buy a house, and it will remain on your credit report forever — absolutely none of this is true.

As we already showed you earlier, bankruptcy does not have an impact on your ability to obtain a security clearance, nor does a poor credit score or being involved in debt negotiations. This is because most of these not only go hand in hand but are a sign that you are attempting to solve your debt.

Through bankruptcy, the majority of your debts may be cleared from your name and allow you to take those first steps toward living a debt-free life. This is the purpose of bankruptcy. To give you a second chance.

What About My Credit Score?

When you file for bankruptcy your credit score is going to take a hit, but considering you are in deep enough debt to where you have to file for bankruptcy, your credit score was probably already not great. In fact, in a way, filing for bankruptcy can improve your credit score if you approach the steps afterward in the correct way.

Once your debts have been cleared, you are going to have a chance to build up positive credit through options such as mortgage loans, credit card payments, and car payments. Yes, the interest rates on these are going to be high, but as long as you are paying everything off on time you shouldn’t have to worry about that.