Many area families understandably want an answer to this question before they file a bankruptcy petition. In many cases, security clearance revocation, or even a downgrade, could mean the end of a job or at least a considerably lower income stream.

It’s illegal for any Illinois entity, including the Department of Defense, to discriminate against anyone based solely on a bankruptcy filing. However, it is not illegal for the DoD, or any other entity, to take action based on the reasons behind said bankruptcy filing. That’s where Guideline F of DoD Directive 5220.6 comes in. Since the 1990s, this document has established the parameters for when the government may take action against a security clearance.

This document contains both the blueprint for action against a security clearance and a roadmap for defeating such action at a necessary hearing.

Concerns that Lead to Adverse Action in Indiana

In many cases, financial problems lead to problems at work, perhaps because the stress makes it difficult to concentrate or because the moonlighting debtor has less energy. But that’s not the overall concern as far as the DoD is concerned. Instead, the DoD worries that financially-strapped individuals with access to sensitive information might sell that information to unscrupulous people or groups in order to raise cash.

Not all Indiana financial problems create this pressure, which is why the DoD lists some specific examples. In most cases, bankruptcy does not make these issues worse or does not involve them at all.

  • – History of Unmet Obligations: Most all bankruptcies do involve multiple delinquent accounts. However, the issue is not a steadfast refusal to pay bills. Instead, many families encounter one big financial problem, such as a job loss, that creates a snowball effect. That’s not the same thing.
  • – Unwillingness or Inability to Pay Debts: This factor often assumes that the debtor purchased luxury goods on credit and then either would not or could not pay for said items. In most cases, that’s simply not the case with regard to bankruptcy.
  • – Root of Financial Problems: Most bankruptcy debtors file voluntary petitions due to medical bills, divorce, business downturn, or some other purely economic factor, and not due to “gambling, drug abuse, alcoholism, or other issues of security concern.”

The bottom line is that most consumer bankruptcies do not involve any level of fraud or dishonesty, and “honest yet unfortunate” debtors are unlikely to resort to illegal activities to raise money.

Mitigating Circumstances in Chicago

Many bankruptcy petitions support one or more of the listed mitigating circumstances, which include:

  • – Isolated Incident: As mentioned earlier, most people file bankruptcy because of one major financial storm. Furthermore, there are very few repeat bankruptcy filers, especially since there are strict time limits that regulate subsequent filings.
  • – Not Recent: Typically, most families struggle with debt, at least off and on, for several years before they file bankruptcy, because a voluntary petition is usually a last resort after everything else has failed.
  • – Lack of Control: The listed examples (“loss of employment, a business downturn, unexpected medical emergency, or a death, divorce or separation”) almost precisely mirror the top reasons that people file bankruptcy.
  • – Progress Towards Resolution: Significantly, Guideline F does not require progress towards paying outstanding debts, but “clear indications that the problem is being resolved or is under control.” In a nutshell, that’s exactly what bankruptcy does.

All bankruptcy debtors also receive debt counselling, which is yet another listed mitigating factor.

Reach Out to Experienced Attorneys

A bankruptcy petition may be the best way to block financial-related activity against a security clearance. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. We routinely handle cases in both Illinois and Indiana.