We frequently discuss how financial issues are the top cause of security clearance denial and revocation for applicants. Given the stats, you may look at your own mountain of debt or prior bankruptcy and worry your chances of obtaining a security clearance are sunk – but a recent case brought before the Defense Office of Hearings and Appeals (DOHA) demonstrates how it’s possible to overcome even a multitude of financial issues and still successfully obtain a security clearance.
True or False: Bankruptcy will prevent you from obtaining a clearance.
Myths surrounding the security clearance abound and one of those that I still hear fairly frequently is that a prior bankruptcy is a red flag during a security clearance application process. The reality is a number of applicants with even recent bankruptcies have been successfully able to mitigate that financial issue and obtain a security clearance. The issue is what caused the bankruptcy, and how the applicant followed through with the rules set out by the bankruptcy court.
A recent applicant for a security clearance had a number of financial issues that came up in her initial Statement of Reasons (SOR). They included:
- A 2009 bankruptcy
- $28,000 in delinquent debt
- An $11,000 debt to a leasing department
- A $21,000 loan in which the applicant was a co-signer because her daughter forged her signature.
At face value, all of those things likely look like a bad pattern to walk into a security clearance court with. In addition to the bankruptcy, other debts continued to plague the applicant. Despite that reality, she was able to obtain a security clearance – why? The work of an attorney and clear steps taken to address all of the debts prior to the DOHA hearing.
Applicants may walk into court with the exact same issues, unaddressed, and not walk out with a favorable clearance determination. That’s one of the reasons we highlight good record keeping as a key aspect of the security clearance process. The applicant worked with an attorney to address all of the financial issues and provide documentation that they were addressed to the court. She also provided a budget that demonstrated how she was currently living within her means, with the income to support her expenditures.
False: If bankruptcy is recommended by a financial planner, it may be the best step to keeping your clearance eligibility.
When it comes to maintaining your clearance eligibility, the best advice is to avoid going it alone. Applicants who don’t take steps to address their debt, who avoid it, or who ignore the recommendations of financial counselors or advisors are often those who end up losing or failing to obtain clearance eligibility. There is no ‘special’ financial red flag created by a bankruptcy. Your security clearance eligibility will still be viewed in light of the whole person concept.
Working with an attorney to address and document your debt, along as having a security clearance attorney represent you in the course of an appeal, are the best steps you can take to obtain a favorable determination.
