Your Bankruptcy And Your Security Clearance
Federal law clearly states that it is illegal to discriminate against people who file bankruptcy, yet the myth persists among some people that a voluntary petition adversely affects security clearances.
One of the most important provisions in Department of Defense Directive 5220.6, which controls security clearance issuance, is in the preamble: “each [area] is to be evaluated in the context of the whole person.” In other words, financial problems are not in and of themselves a cause for concern, as long as giving the person “access to classified information is clearly consistent with national security,” when all eleven factors are considered.
Handling Bankruptcy Filings
Federal law notwithstanding, it is naive to think that some people do not look down on debtors who file bankruptcy. That is certainly not the right sort of attitude to have, but we are human and we often make judgements based on mere appearance or on only some of the facts.
As a rule, it is always best to be upfront about bankruptcy filings. Pre-bankruptcy involves appointments at a lawyer’s office, lots of financial paperwork, and other telltale signs. Rather than make excuses or avoid the subject, which creates the impression that you have something to hide, always give direct answers to direct questions. That being said, a family’s financial issues are no one else’s concern.
Possible Adverse Action
If supervisors have legitimate security concerns about certain individuals, they can take action against their security clearances, up to and including revocation. In addition to financial concerns, which are discussed below, the DoD also considers foreign influence and foreign preference, which is basically having overseas financial interests, an affinity for a foreign country, relatives that work for a foreign government (e.g. a sister-in-law at the French Consulate on Michigan Avenue), or relatives that are foreign citizens. In this area, the DoD is concerned that the security clearance holder’s loyalty to the United States could be questioned, at least under certain circumstances.
As for “Financial Considerations,” the DoD is concerned that persons under financial stress may turn to illegal activities to raise funds, and that would include selling state secrets. This concern seems a bit far-fetched, but this situation probably has occurred before.
Mitigating Circumstances
Although the concern is a little off, the DoD-approved mitigating circumstances are quite applicable to most people, especially those who have filed bankruptcy.
- Cause: Most people file consumer bankruptcy because of divorce, medical bills, job loss, or another “isolated incident.” Furthermore, E2.A6.1.3.3 states that financial problems that “were largely beyond the person’s control” are not a source of concern.
- Rehabilitation: If people ignore debts, they are almost inevitably caught in a downward spiral. However, if people take action, even if that action is a bankruptcy filing, the situation normally improves. The DoD recognizes this, which is why if there are “ clear indications that the problem is being resolved or is under control,” the person’s financial problems are not a security concern.
- Resolution: Bankruptcy certainly counts as a resolution, because unsecured debts are discharged and/or secured debt delinquency is repaid.
These are only the listed mitigating circumstances, and there may be other ones as well, depending on individual circumstances.
Contact Aggressive Lawyers
Bankruptcy protects security clearances. For a free consultation with an aggressive bankruptcy lawyer in Chicago, contact the Bentz Holguin Law Firm, LLC. We routinely handle cases throughout Illinois and Indiana.
https://www.law.cornell.edu/uscode/text/11/525
http://www.dtic.mil/whs/directives/corres/pdf/522006p.pdf
