Bankruptcy and Security Clearance:  Knowing What to Do Is More Important Than Ever.

“Agencies should collect criminal and financial information, such as a civil legal proceeding or credit score…at least twice every five years.”

Federal News Radio broke the story yesterday.  People with security clearances will have their credit checked much more often.  That was in the budget bill, just passed by Congress, December 2015.

“Agencies should collect criminal and financial information, such as a civil legal proceeding or credit score…at least twice every five years.”

You can read the complete story, here.  

Ignoring the problem will cause you to lose your clearance

The same Federal News Radio broke that story, I filed a bankruptcy for Don and Donna.

Both Don and Donna are disabled vets; both have clearances; both were in financial trouble for three reasons.  First, they had owned a house near a base with a lot of cutbacks.  Values dropped and they couldn’t sell it, or rent for enough to cover the payment.  Second, they were still battling medical problems, because of their service.  Third, late in life, they started a family and had small children.

They came to see me in the spring of 2014.  But then Don lost his nerve, and decided the try to “handle the problem himself.”  Of course he couldn’t.  They came running back to see me in October 2015.  Why?  Not a garnishment–something far worse.  Don had lost his clearance because of financial irresponsibility.  Luckily, he’s a Federal employee, not a contractor, so right now he’s on admin leave, rather than just out of work.  Filing bankruptcy at this late date just MIGHT help him get his clearance back.

Bankruptcy means a Federal court has bought your excuse and agreed you can’t afford to pay. Just ignoring the problem means you cover up. Which do you think is better?

Let me make it clear.  Filing bankruptcy is not good for your clearance.  Paying your debts on time is good for your clearance.  But filing bankruptcy is way, way, way better than just having the debts go late.  

Filing bankruptcy tells your security office that a Federal court has bought your excuse and agreed you can’t afford to pay.  Just ignoring the problem tells your security office that when you are in trouble, you cover up.  Which do you think is better?

I’ve done a thousand bankruptcies for people with secret and top secret clearances.

Once you are in financial trouble, you need to self-report, explain the problem, and talk to a bankruptcy lawyer.  That will almost always avoid trouble.  Ignoring the problem, getting further behind, will usually, sooner or later, cost your job.