Will It Affect My Security Clearance

WILL I LOSE MY SECURITY CLEARANCE IF I FILE CHAPTER 7 BANKRUPTCY?

Answer:  NO. You will not compromise your job clearance or security clearance.

Why? The answer is simple: The law is there for you to use if needed.

When you file you are availing yourself to the Federal Laws of Bankruptcy that are designed to protect you (the consumer). These laws have been updated over time but have been around for 200 years. It would make no sense to penalize someone and jeopardize a State or Federal clearance because they are legitimately asking for protection under established Federal Bankruptcy Code.

If I do not file, can it hurt my security clearance?

Answer: YES. Actually it’s the reverse of what most people think. Having bad credit, and active lawsuits and unpaid judgements and liens and foreclosures out there against you, make you much more of a security risk in a prospective employer’s eyes due to the fact that you are in a highly stressful debt situation which would make it easy for an unscrupulous 3rd party to come in and tempt you with financial incentives. So the debt makes you a security threat.

Do lenders see me as a greater risk too?

Answer: YES. It is actually the same as above. Banks and credit unions do not want to loan money to anyone with unresolved debt issues, because what if they offered you a car loan or a mortgage and the next week you are garnished from an old debt and can’t pay them? They would much rather see a cleared debt history through a bankruptcy than old unresolved debt.