Bankruptcy and Government Security Clearances

[Anonymous]

I did a quick search on this forum to see what experiences you may share about bankruptcy and security clearances and I did not see much. Either its not an issue or its so minor, in the big picture, that its not worth captivating readers on this board. 

For a good three months I was battling with filing for bankrupty because I felt that I would lose my government security clearance and job if I filed.  After doing some research, it turned out the opposite may be true. I am in the process of filing so I really wont know the actual consequences until my clearance is renewed.

Bottom line for those of you who are drowning in debt and also have a job that requires a security clearance:  carrying too much debt makes you a financial liability to the government while filing for bankruptcy and debt counseling are seen as positive steps to address your financial problems.  Here are the articles that inspired me.   

http://www.clearancejobs.com/news.php?articleID=39

http://www.clearancejobs.com/news.php?articleID=41

http://www.clearancejobs.com/news.php?articleID=44

If I had not read these articles I would continue to think that I can just make minimum payments on my credit cards for the rest of my life.

Please feel free to post your experiences

[Anonymous]

My brother was denied a job with the Government a few years back because of a past Chapter 7.  I dont know how it works after you are already employed. 

[Anonymous]

20 years ago I attempted to enlist in the US Airforce.  They ran my credit as part of background check.  There was an unsatisfied judgement on my CR that I was not aware of....turned out to be a case of mistaken identity.

However, until I resolved it the Air Force would not accept me.  It cost me $500 attorney's fees to handle getting this taken care of.  By the time I got that taken care of, there was a 6 month waiting time frame for a slot for my preferred MOS.

I got restless with the whole time delay...so I went down to the US Army recruiter.  18 days later I was standing at parade rest in Fort Benning, GA.  Army.

Moral of the story:  Yes, bad credit and/or bankruptcy can be a conflict for some government jobs, especially those requiring security clearances.

[Anonymous]

lolol txjohn...I was about to respond and say that I bet the army would take you even with lousy credit, and then I read the parade rest sentence and cracked a smile. Some things dont change...uncle sam certainly does not discriminate: 'no credit, no problem'.  Its a shame that soldiers these days are intentionally screwing up their credit to make themselves security risks in order to get out of a deployment. 

[laz98]

the navy took me & my bad credit, no problem.  it wasn't until i had been in almost 4 years that they decided they didn't like my credit history.

[Anonymous]

Wow.  Did they discharge you for your credit being bad?  I am asking because I work for a Financial Institution that checks credit in the hiring process.  When I was hired my credit was pretty good.  Now it is pretty bad.  I dont know it they will check it again.  I hope that I will not give them a reason to because since I have been proven as a reliable good worker. 

[laz98]

me?  no, they didn't discharge me.  but i had to jump through a bunch of hoops, showing i had made progress in cleaning up my credit.  it was a bunch of bs if you ask me.

[DrJim]

I am in the Army and can answer this question from the personal experience of several Soldiers who have worked for me. I have known many who lost their security clearances because of bankruptcy. I was able to work with one over a period of years to help him get it reinstated. Normally you have to show a plan for paying off the debt and progess toward doing so. Because of recent events, some folks are being allowed in with a "moral waiver". This is usually a past bk that has been discharged. But very often those are only granted for critical MOS's (military operating specialty). The fear is that if you need money you will be an easy target for recruitment by foreign operatives. Who grants your clearance? In the Army I can go to our G-2 (Intelligence Officer) and talk things over. If you have that kind of contact that might be the best thing to do. At best I would think you might get a classified or even Secret clearance. I don't think the chances are very good for a Top Secret with a bk. Hope this helps.

[Anonymous]

DrJim--thats a good assessment. I also want to add that the circumstances behind how you got into debt are considered, but yes, you are correct, your plan is important, whether its bankrupty or using a debt counseling agency.  The article talks about the plan--what have you done to correct the problem or what actions were taken to pay the debt?  For example, I think a ch 13 filing would be more favorably looked than a ch 7.  I qualified for a 7 but filed a ch 13 for this reason alone.