A few years ago, I did a post entitled, “Filing Bankruptcy and My Security Clearance.” Everything I’ve said in that post remains true.
The fact of the matter is that the bankruptcy doesn’t disqualify you from obtaining or maintaining a security clearance. As I explain to clients, the federal government doesn’t have a problem with you dealing with financial problem using the Bankruptcy Code. Bankruptcy law is, after all, federal law. What the government can’t stand is those in the, as I put it, demilitarized zone of financial problem–that is, those in the middle of a financial mess with no plan or apparent progress dealing with the mess.
The reason is obvious
If you’re in the middle of a financial mess, you’re far more likely to be tempted by a bribe or to engage in inappropriate activities for financial gain–after all, YOU NEED THE MONEY!!
You may also need a security clearance lawyer
Until recently, I didn’t know of any South Carolina lawyers handling security clearance cases. However, I’ve had the pleasure of meeting Leanne Innet, a North Charleston, South Carolina attorney who focuses her practice on these issues. Leanne confirmed my analysis, explaining:
Although financial challenges by themselves may not bar you from obtaining or maintaining a national security clearance, the government does scrutinize this area very carefully. By applying the ‘whole person’ standard, the government will consider the facts leading up to the financial difficulty and the steps taken to resolve the issues—which, ultimately, may include filing bankruptcy. If bankruptcy is filed, your performance under the plan is equally considered. The government is interested in how you solve your problems; therefore, ignoring them is not an option when a clearance is at issue.
I now have someone who can help counsel those with security clearance concerns, and I recently referred a client to Leanne. There, the question really wasn’t whether to file bankruptcy, but rather when to file. When the client applied for the clearance, credit was good–that was over a year ago–and now, well, not so much.
Having Leanne available will help me help my clients with these issues and is a welcome change to my practice. Moreover, even if your security clearance problem doesn’t involve financial issues, Leanne is now the “go to” person here in South Carolina.
The take away
The idea that bankruptcy will result in you losing your security clearance or not obtaining one is just not true. It’s a sort of urban legend I hear from time to time. It reminds me of the “wait 20 minutes to swim after you eat” rule I heard growing up. And if you want legal counsel from someone who regularly deals with security clearance issues, call Leanne at (843) 814-2928.
Hi Russ,
You raise a great point. Many of our Maryland and D.C. potential bankruptcy clients come to us with significant unsecured debt, and many times debt that was incurred to the Federal government on army credit cards. They always ask the question, will I loose my security clearance or worse my commission if I file for bankruptcy. The analysis is not always simple, due to the fact that the level of clearance can provide some limited hurdles. However, in general you are right, the government would rather you be debt free then a slave to debt.