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Home > Ask The Get Out of Debt Experts > Do I Need Good Credit to Get a Top Secret Clearance? Can I Get a Security Clearance if I Go Bankrupt? – Alex

Do I Need Good Credit to Get a Top Secret Clearance? Can I Get a Security Clearance if I Go Bankrupt? – Alex

“Dear Steve,

Hello Steve. I appreciate the advice that you provide us with (=:

I’m 27 years old, naturalized citizen (born in Russia). Currently in the Army National Guard (Intelligence). My chain of command hasn’t filed clearance paperwork yet because they’re waiting for me to resolve my $25000 unsecured credit card debt (including 1 personal loan). I’ve accumulated this debt over the years due to financial irresponsibility, but the lesson has been learned. Most of my credit card have been canceled by the creditors.

Being a college student with unemployment checks I don’t see this debt resolved until after 4-5 years from now when I get my Bachelor’s. I don’t have a criminal history and am clean off any stains on my record. This debt is eating me up. Every morning I wake up I carry the burden of my financial debt.

I’ve been told that I have to have a good credit in order to obtain a Top Secret clearance. I have 2 options and I’m asking you to tell me your opinion on them.

The first option is to borrow $25000 from a relative and pay the entire debt off. I should mention that it’s not guaranteed that the relative would lend me so much money.

The second option is to file bankruptcy.

Which of the options do you think would make me look better in the eyes of an investigator?

Thank you!

Alex”

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The Answer

Dear Alex,

Here is what the Air Force had to say on this subject.

The status of your security clearance can be affected, but it is not automatic. The outcome depends on the circumstances that led up to the bankruptcy and a number of other factors, such as your job performance and relationship with your chain of command. The security section will weigh whether the bankruptcy was caused primarily by an unexpected event, such as medical bills following a serious accident, or by financial irresponsibility. The security section may also consider the recommendations and comments of your chain of command and co-workers. This is an issue that can be argued both ways, so as a practical matter your security clearance probably should not be a significant factor in making your decision about whether to file bankruptcy. The amount of your unpaid debts, by itself, may jeopardize your clearance, even if you don’t file bankruptcy. In that sense, not filing for bankruptcy may make you more of a security risk due to the size of your outstanding debts. By the same token, using a government-approved means of dealing with your debts may actually be viewed as an indication of financial responsibility. Eliminating your debts through bankruptcy may make you less of a security risk. – Source

The best course of action you can take is to ask to speak with the security division that will do your screening. If you look at one of the purposes of a security clearance when looking at debt, to determine who is more at risk of being bribed, then the outstanding debt puts you more at risk. And as the Air Force says “Eliminating your debts through bankruptcy may make you less of a security risk.” The Army says “Likewise, a bankruptcy will not automatically prevent obtaining a security clearance.”

The Army has also issued advice about this situation.

With the nation in the throes of an economic downturn and entering the seventh year of overseas combat, some Soldiers and civilians are worried about their security clearance.

The stress of combat and the rise in foreclosures have some Soldiers wondering if their security clearance will be impacted.

“All Army personnel should understand that they can obtain counseling services for financial and mental health issues without undue concern of placing their security clearance status in jeopardy,” said Col. Edward Fish, commander, U.S. Army Central Personnel Security Clearance Facility, known as the CCF.

Army leaders want to ensure Soldiers that the security clearance process is fair, equitable and comprehensive and the Army is taking steps to ensure it remains that way. Leading this effort is the deputy chief of staff, G-2, who is responsible for policy formulation, evaluation, and oversight of intelligence activities for the Department of the Army. This includes policy development and oversight of the security clearance process, to include oversight of the CCF.

The CCF reviews personnel security investigations to grant security clearances for Soldiers, civilian employees and contractor personnel. The CCF uses the national adjudicative guidelines to process security clearance requests. These guidelines outline the standard application of the process, which includes consideration of both favorable and unfavorable information, identify specific concerns, and highlight associated mitigating factors.

A bankruptcy or foreclosure will not automatically prevent one from obtaining or maintaining a security clearance, according to G-2 officials. They explain there are many conditions surrounding financial hardships that often mitigate security concerns.

The guideline for financial considerations focuses primarily on individuals who are financially overextended because they may be at risk of engaging in illegal acts to generate funds. For instance, financial guidelines consider “the conditions that resulted in the financial problem were largely beyond the person’s control…and the individual acted responsibly under the circumstances.” Adjudicators identify such conditions as mitigating circumstances.

For example, if an individual did not have financial problems in the past, yet was forced into foreclosure because of a permanent change of station, or PCS move, adjudicators would consider this a mitigating circumstance. However, if the individual has a history of not meeting financial obligations and now forecloses on a home, this would display a pattern of financial irresponsibility that cannot be easily mitigated, officials said.

Likewise, a bankruptcy will not automatically prevent obtaining a security clearance.

There are many other conditions surrounding financial hardships that often mitigate security concerns, officials said. About 98 percent of cases received by the CCF which involve financial issues were granted a security clearance. This trend has been consistent since 2005. – Source

Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.

Big Hug!

Do I Need Good Credit to Get a Top Secret Clearance? Can I Get a Security Clearance if I Go Bankrupt?   Alex
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Justin

    Steve,

    I’ve been running a company that specializes in helping people mitigate issues that may affect their security clearances. We see a lot of bankruptcies. Bankruptcies are more common than people tend to believe. There are a lot of urban legends regarding the topic. The information you provided is great and comes from relevant sources. It’s a breath of fresh air to see an article that is factual. Keep up the good work! I have an article on bankruptcy that can be seen at http://indocnationalsecurity.com/articles/how-bankruptcy-can-affect-your-national-security-clearance/

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