How Does Bankruptcy Affect My Security Clearance?
Our Indiana clients ask this question a lot. The Hoosier State has a number of military bases which directly, and indirectly, employ thousands of people. Many of these individuals rely on their security clearances. They are understandably concerned about doing anything which may jeopardize their authorization levels. The Department of Defense is concerned as well. In fact, Guideline F of DoD Directive 5220.6 directly addresses this issue.
Financial problems could affect your security clearance. However, before the DoD can take adverse action, there must be notice and hearing. At this hearing, a Chicago bankruptcy attorney can use your bankruptcy filing to alleviate the DoD’s concerns and save your security clearance. Unless you file, the financial problems you face could result in security clearance revocation.
Areas of Concern
As a rule, desperate people sometimes do desperate things. That could include selling state secrets to raise money. The likelihood is remote, but this kind of thing has happened before, and it will happen again. So, the overall concern is valid, especially when it comes to people who file bankruptcy. However, the specific areas of concern listed in Guideline F usually have little, if anything, to do with bankruptcy, especially a Chapter 13.
- History of Unmet Obligations: A few bankruptcy filers are financially irresponsible. But in almost all cases, the underlying issue is a single financial crisis, like high medical bills. Although there is usually a snowball or ripple effect, such incidents usually don’t qualify as a pattern of unpaid obligations.
- Illegal or Deceptive Practices: Usually, the aforementioned crisis is beyond the debtor’s control. Deceptive or illegal conduct, such as “ embezzlement, employee theft, check fraud, income tax evasion, expense account fraud, filing deceptive loan statements, and other intentional financial breaches of trust” are rarely involved.
- Unwillingness or Inability to Pay Debts: Chapter 13 filers are neither unwilling nor unable to pay their debts. In fact, Chapter 13 includes a monthly repayment plan, so these individuals are clearly willing to pay their debts. As for inability, they may be unable to pay them at one time, but they are certainly not unable to pay them in a general sense.
In a nutshell, Chapter 13 gives people who are behind on home mortgages and other secured debts up to five years to erase debt delinquency. Chapter 7 almost immediately discharges medical bills, credit cards, and other unsecured obligations.
The DoD cannot use a bankruptcy filing against the debtor in a revocation hearing. Such discrimination is illegal. Instead, the DoD must use a specific concern, and as mentioned, these concerns are largely inapplicable to bankruptcy filers.
Mitigating Circumstances
In contrast, the listing mitigating circumstances are directly relevant to bankruptcy, especially a Chapter 13.
- Recent Behavior: Bankruptcy is a last resort for most people. Therefore, by the time they go to bankruptcy court, the underlying financial problems are usually at least a year or two old.
- Lack of Control: Financial problems are not an issue if they are related to “loss of employment, a business downturn, unexpected medical emergency, or a death, divorce or separation.” These situations are also the most common causes of consumer bankruptcy filings.
- Light at the End of the Tunnel: Likewise, the concerns are not a problem if “there are clear indications that the problem is being resolved or is under control.” When people file bankruptcy, they take control of their own financial situations.
Since both the concerns and mitigating circumstances favor Chapter 13, that could influence the kind of bankruptcy the debtor files.
Contact Dedicated Cook County Lawyers
Your security clearance may be safe when you file bankruptcy. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.
Resource:
esd.whs.mil/Portals/54/Documents/DD/issuances/dodd/522006p.pdf
