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Will Filing For Bankruptcy Affect My Security Clearance?


Because I practice near NAS Point Mugu and Port Hueneme, in Ventura County CA, and because a lot of my clients work at Edwards AFB and Plant 42 in Palmdale, a significant portion of my clients are active duty military, federal government employees, or individuals employed by defense contractors. These clients are likely to have either secret or top secret clearances that they need for their jobs.

A lot of people ask how bankruptcy will affect their security clearance.

Guideline F And Your Security Clearance

DOD Directive 5220.6 explains government security clearances.

Guideline F is relevant to clients that have debts and debt problems, since it determines whether there will be a problem down the line.

Paragraph 20 of Guideline F in the DOD Directive sets forth circumstances that mitigate security concerns. Paragraph 20(d) states that “the individual initiated a good-faith effort to repay creditors or otherwise resolve debts.”

Those paragraphs cover either a chapter 7 or a chapter 13 bankruptcy.

Furthermore, Paragraph 20(b) of the Directive allows a person to explain how he or she found themselves in financial trouble prior to filing for bankruptcy.

Does bankruptcy affect security clearances?

One bankruptcy in a lifetime, and by my experience, will not cause any clearances issues. This is not a guarantee, simply my experience.

If, however, there are other issues, then that could be problematic.

I’ve seen situations where, say, two bankruptcies 15 years apart would be enough to revoke clearance.

A bankruptcy paired with a criminal charge (DUI, domestic abuse, etc.) can also get your clearance revoked.

The government usually tries to add a charge to any security case under Guideline E which deals with personal conduct.

This charge is easy to make under Guideline E for not answering the Questionnaire truthfully on the SF86 Form. This is the application that the applicant fills out under oath. SF86 seeks to find out everything about an individual, including financial history.

With regard to the financial questions, applicants are asked if they have ever been sued, if they have ever had a judgment against them, if they have ever been delinquent more than 60 days, 90 days, and 120 days with any debts, etc.

Frequently, applicants get tripped up by questions like that, and an incorrect answer can be used against them.

Before you submit a security clearance application, let’s see your credit report.

In most circumstances, filing for bankruptcy should not be viewed as a security problem if finances have not been a recurrent, lifelong problem for the applicant.

Prior to submitting an initial security clearance application, or in anticipation of a renewal for a clearance, it’s a good idea for you to get your free credit reports from

See what’s on your credit report. If you have delinquent debts out there, please get advice on what to do with them.

Finally, if you have a security clearance and you file for bankruptcy, let your FSO know that you filed for bankruptcy. In most circumstances, the FSO just wants a copy of your petition. Again, being completely honest about everything that involves your clearance is the only way to achieve it.

Does bankruptcy make sense for you? Set a call with me to find out. We’ll talk. I’ll go over all your options. I won’t pressure you and I will give you all the information you need to make an informed decision.

I’m Eric Ridley: The Debt Freedom Attorney. My job is making you a (bigger) hero to your family by eliminating your debt so you can be free of creditor harassment, calls, wage garnishments, lawsuits, and foreclosure.

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