Does Bankruptcy Affect a Government or Military Security Clearance?

Despite serious debt problems, some people are reluctant to seek bankruptcy protection because they are concerned about how filing might affect other areas of their life. An individual whose government or military position requires some form of security clearance may worry that obtaining financial relief could threaten their status at work. 

It’s important to know that security clearances are granted or denied on their own merits, and there is no bar on personnel who have filed for bankruptcy. Financial stability can be a key consideration in these reviews, and initiating the legal bankruptcy process is often the best way for someone struggling with debt to re-establish a solid foundation. Specific areas of a person’s financial situation that might be analyzed by a government agency include the following:

• Reason for bankruptcy — Money troubles often stem from situations outside of an individual’s control, such as a medical emergency, layoff or unexpected repair. Someone whose bankruptcy was not the result of reckless financial behavior should not be punished. 
• Reaction to debt problems — Demonstrating proactive steps to manage debt, such as seeking financial counseling or adhering to a repayment plan, can reflect positively on an individual’s trustworthiness and character. 
• Patterns of financial behavior — When a government agency or a branch of the armed forces is determining whether someone poses a risk, a persistent pattern of money troubles could mean that the subject of the investigation is vulnerable to economic coercion. This is distinguishable from a person who fell into debt because of one unfortunate circumstance and worked their way out of it. 
• Honest disclosure — Failing to disclose financial difficulties during the clearance process can raise more red flags than a prior bankruptcy filing.

No one should regard bankruptcy as a type of punishment or evidence of a negative character trait. Though there might be some consequences that linger after the legal process is completed, such as a credit-score reduction, these challenges are usually temporary as long as you stay within your budget going forward. Consulting with an experienced attorney can help you gain an informed perspective on what life after bankruptcy might look like. 

At Jeff Field & Associates, we advise Georgia residents on a full range of bankruptcy issues, including the effect filing might have on their personal life and career. Please call 404-381-1278 or contact us online for an appointment. Our offices are in Douglasville, Gainesville, Bogart, Lawrenceville, Marietta and Scottdale.