If You File For Bankruptcy, Can You Still Get (Or Keep) Your Government Security Clearance?

Law Blog

If you're a government employee, can you lose your security clearance if you file bankruptcy? The answer to that question is largely dependent on a variety of mitigating or aggravating factors. This is what you should know.

Losing A Security Clearance Usually Comes Down To One Of Two Reasons.

If you have a long-standing security clearance, filing for bankruptcy generally won't cause you to immediately lose it. A bankruptcy usually gets noticed when you first file for a security clearance or are in the process of having your clearance renewed. Often, the problem is one of two things.

1.) A long pattern of financial problems, which indicates that you have a history of being irresponsible with money or making poor decisions.

Security clearances are granted based on complex evaluations of a person's past and current life, but it's largely a leap of faith between the agency giving the clearance and the individual.

If your pattern of behavior - evidenced through your past financial actions - indicates that you aren't trustworthy, you can easily be denied or lose your security clearance.

2.) Lying about your financial situation or trying to evade questions about the bankruptcy.

Think of it this way: the federal government wants to make sure that you aren't in a position where you'd be willing to lie to keep a secret. If you are desperate to keep a secret, you can be manipulated into doing what someone else wants in order to avoid exposure.

It's Primarily An Issue Of Character.

The Department of Defense, for example, says that security clearances are based on a person's "loyalty, character, trustworthiness, and reliability."

While lying on official forms is always a bad move, and a history of chronic financial issues is problematic - owning up to your problems can be seen as a positive factor in your evaluation. In that situation, filing for bankruptcy can actually help you get or retain your security clearance.

Filing for bankruptcy can be seen as a practical method of accepting responsibility for your debts, and doing what you can with the legal means at your disposal. In this way, you aren't penalized if you've ended up in bankruptcy court through some unexpected event - like major medical bills following a car accident or some other tragedy.

Combined Problems Can Negatively Impact The Issue.

You are more likely to have problems with obtaining or renewing a security clearance if your bankruptcy is combined with other legal problems, like a criminal complaint due to assault, DUI charges, or domestic violence issues. A combination of legal problems (or possibly just any of these issues on their own) speaks to problems with your overall personal behavior that may make you untrustworthy.

If you already have a security clearance, keep your boss in the loop about your bankruptcy filing. It may be uncomfortable to have to address the issue, but more than likely your candor and transparency will go a long way toward easing any concerns about your ethics and reliability. Most importantly, discuss your concerns and get your attorney's advice on how to handle any security clearance issues prior to filing, rather than compounding your problems later. Check out websites such as http://timgeorgelaw.com for more information. 


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