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Bankruptcy & Security Clearance Issues
What About My Security Clearance?
I’ve done bankruptcies for hundreds of people who have security clearances. Some of them were told by their security people that they would lose their clearance unless they filed bankruptcy. Having trouble paying your debts can be automatic grounds for losing your clearance–because the government does not want you desperate for money and selling things that don’t belong to you. I’m sure you’d agree that you probably don’t want to do that either!
I have known only six people who lost their security clearance after filing bankruptcy. Three of those had been ignoring their bills and dragging around bad credit for years without doing anything about it. At their review, the government said they were just too stupid to be trusted. (Bankruptcy by itself cannot be used to deny a security clearance; but it can be used against you in combination with other problems.) Of the other three, one worked at perhaps the most secure location in government. The other two I can’t explain.
I have seen several people who did not have clearances and who were denied interim clearances when they applied because of the bankruptcy. I fought one of those to the Fourth Circuit, but lost.
As a general rule, people who already have a clearance and who aren’t in trouble for anything else do not lose their clearances because of bankruptcy. People who are applying for a clearance for the first time should do everything possible to keep everything current until the clearance is approved.
In some parts of government and certain jobs, filing a Chapter 13–and paying back some of your debts–is better than filing a Chapter 7.
If you work in a sensitive area of the government rest assured that I’ll do everything I can to keep your life as intact as I can. I’ve helped more than 12,000 people over the life of my career as an attorney and I want to help you if it makes sense.
P.S. If you haven’t read the many client reviews we have then be sure to. I always think it’s good to hear what other people have to say about me, their experience and if they think bankruptcy was the right choice for them and their situation. You might just be surprised at what you discover.