Given that financial issues are the number one reason for security clearance denials and revocations, it’s no small wonder that one of the most frequent questions my office receives is how to resolve delinquent debt.

To be clear, I’m not a consumer debt resolution, tax, or bankruptcy attorney. If you have significant delinquent debt, you should consider speaking with an expert in one or more of those areas before taking any action to resolve it.

I can, however, tell you what constitutes adequate evidence of debt resolution for saving your security clearance (and, in turn, your career). In that regard, outright payment of delinquent debt – something that’s not feasible for many debtors – isn’t the only option. Here are some acceptable alternatives for “resolving” delinquent debt within the National Adjudicative Guidelines for Security Clearances:


Savvy negotiators may wish to try proposing “settlement-in-full” to their creditor(s). A typical settlement process works like this: the debtor contacts the creditor and proposes paying a small percentage (e.g. twenty percent) of the total amount owed in exchange for the creditor forgiving the balance of the debt. The creditor makes a counter-offer of a larger percentage (e.g. sixty percent), and the parties ultimately meet somewhere in the middle. Then, upon payment by the debtor of the negotiated amount, the creditor provides a “letter of satisfaction” or “zero balance letter” (both of which are fancy ways of simply saying that the creditor now considers the debt to be fully discharged).

This option may be appealing to creditors in cases where the debt is either not worth suing over or the statute of limitations has passed, rendering the debt unenforceable. In other words, by the debtor offering a settlement, the creditor will get something instead of nothing. Similarly, this option may be attractive for creditors that simply don’t have the time or inclination to track down the debtor. Debtors should know, however, that a discharge of delinquent debt can result in adverse tax consequences; and, in some situations, engaging with an old creditor can restart a since-expired statute of limitations. Again, proceed with caution in cases of significant delinquent debt and consider seeking out competent legal advice before acting.


For debtors who can’t repay a debt in full immediately, but who wish to eventually do so, a payment plan may be an attractive option. Under a normal payment plan, the debtor and the creditor agree to a repayment schedule wherein the debtor contracts to pay set amounts on set dates until the debt is repaid. Often, the creditor will require the debtor agree to auto-payment (i.e. the payments are automatically deducted from the debtor’s bank account) or the debtor will be provided with payment “coupons” to remit to the creditor with a check on the agreed dates.

However the arrangement is structured, documentation is key. The debtor must obtain written agreement to the payment plan from the creditor and must be prepared to provide that, along with evidence demonstrating compliance with the plan, to the government upon request. Using a payment plan to mitigate government concerns about delinquent debt requires some degree of a track record of actual payments (I typically tell clients a minimum of six months). So, individuals facing an imminent security clearance denial or revocation won’t be able to use this option. However, those who have the luxury of time may find a payment plan to be an excellent option. In some cases, a debtor may actually be able to negotiate a payment plan with a reduction in total balance due.


Various studies over the years have demonstrated that roughly twenty percent of all entries on consumer credit reports are inaccurate. That means an individual may have accounts on his or her credit report that are either duplicative, the result of identity theft, or the product of administrative error. A security clearance holder or applicant who, in good faith, believes a credit report entry to be inaccurate can – and must – take steps to challenge that. These include reaching out to the creditor in writing, providing any documentation to help establish error, and, if necessary, filing a police report or identity theft report with the Internal Revenue Service. The key descriptor here is “good faith,” which requires some degree of proactive action on the part of the individual. Sitting on one’s hands and/or simply claiming “its not mine” is often insufficient to demonstrate a good faith dispute.


Lastly, in cases of significant and otherwise unresolvable delinquent debt, bankruptcy can actually serve as a mitigating factor. For this to work, the debtor must typically demonstrate that s/he accrued the delinquent debt due to circumstances beyond his or her control; that s/he made reasonable and good faith efforts to resolve the debts before resorting to bankruptcy; that s/he does not have a pattern of past bankruptcies, such that s/he is abusing the system; and, that s/he has not accrued new delinquent debts post-bankruptcy.

A Chapter 13 bankruptcy is often viewed as more desirable given that the debtor is taking responsibility for the debts by making structured repayments to the creditors through a trustee. However, debts under a Chapter 13 bankruptcy are not typically considered “resolved” until the trustee payments are completed and the bankruptcy is discharged (which can take years). If time is of the essence, a quick Chapter 7 may be the only option. Provided the above criteria are met, a Chapter 7 bankruptcy is usually still an acceptable means of debt resolution.

As you can see, there are a variety of other options available for resolving debt besides simply paying it all off immediately and in full. Of course, the best defense to a security clearance denial or revocation on financial grounds is a good offense. Check your credit regularly, establish a budget, and consider obtaining some education in personal finance. Most importantly, if the government does bring concerns to your attention, address them immediately. Waiting until days or weeks before a scheduled security clearance adjudication to resolve debts does not reflect well on anyone.


This article is intended as general information only and should not be construed as legal advice. Consult an attorney regarding your specific situation. 

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Attorney Sean M. Bigley represents clients worldwide in security clearance denials, revocations, and the security clearance application process. He is a former investigator for the Defense Counterintelligence and Security Agency (then-U.S. Office of Personnel Management). For more information, please visit Readers will also find a low-cost, self-help option for obtaining copies of their security clearance background investigations and DISS/Scattered Castles records at