Does Bankruptcy Affect My Security Clearance?

Yes, but in most cases, bankruptcy has a positive effect, not a negative effect, on your security clearance. In fact, Guideline F of DoD Directive 5220.06, the controlling rule in this area, basically encourages people with financial problems to file bankruptcy in order to protect their security clearances. Filing bankruptcy to cure financial problems may also prevent other adverse action against a security clearance, such as reduction or denial.

A Chicago bankruptcy lawyer accounts for security clearance issues from start to finish. Initially, security clearance concerns could influence the type of bankruptcy filed. Then, a lawyer works hard to wrap up the case as quickly and quietly as possible, to minimize disruptions. Moreover, if the government does take action against a security clearance, a Chicago bankruptcy lawyer stands up for you during that process.

Financial Concerns

The DoD places financial concerns alongside excessive alcohol or drug use and other personal conduct concerns. People who abuse substances often make reckless decisions, and people with serious financial issues sometimes make desperate decisions. This desperate decision could be selling secrets, a situation that’s arisen before and will arise again.

However, for purposes of this post, we’re concerned with how these financial concerns might interact with bankruptcy. Specific concerns, and how they relate bankruptcy, include:

• History of Unmet Obligations: Frequently, people file bankruptcy because their financial problems have snowballed out of control. They miss a payment or two, and then, to catch up, they must rob Peter to pay Paul. As a result, many bankruptcy filers have a history of unmet financial obligations.
• Unwillingness or Inability to Satisfy Debts: Let’s face it. Most people file bankruptcy because they’re unable and/or unwilling to pay their bills. Either unwillingness or inability could create a desperate financial situation, especially if the aforementioned snowball is close to the bottom of the hill.

Sometimes, filing bankruptcy triggers a Guideline F-related adverse action. This filing is proof of financial concerns. Other times, Guideline F-related actions are based on lifestyle changes, such as a person who moved out of a large house and into a tiny apartment.

Mitigating Circumstances

Bankruptcy might be the cause of a financial concern adverse action. However, bankruptcy is always the cure for these financial concerns, because of the mitigating circumstances listed in Guideline F.

The most important two are E2.A6.1.3.4. (The person has received or is receiving counseling for the problem and there are clear indications that the problem is being resolved or is under control) and E2.A6.1.3.6. (The individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts).

Bankruptcy filers must complete mandatory financial counseling classes, and bankruptcy controls financial problems so they don’t get worse. These mitigating circumstances are especially applicable to Chapter 13 bankruptcies, since Chapter 13 includes a repayment plan, which is a good-faith effort to repay overdue creditors or otherwise resolve debts.

 Work With a Thorough Cook County Lawyer

No matter what kind of financial problem you are having, bankruptcy could be a way out. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.

Source:

esd.whs.mil/Portals/54/Documents/DD/issuances/dodd/522006p.pdf