Security Clearance Concerns - Financial Considerations

This is a two-part blog series. These blogs are companion blogs to my previous postings with regard to security clearances.

As part of this blog post, I wanted to address the two most common security clearance issues that I see in my practice. The first common issue that many people face with regard to their security clearance falls under financial considerations. Guideline F of DOD Directive 5220.6 deals with this concern. The guideline is as follows:  Guideline F Sections 18 and 19.

The government pulls credit reports as a part of its review process. I have previously written that clearances will now be evaluated on a random and continuous basis. This is a dramatic change from the previous review that occurred every five years for a top-secret clearance and every 10 years for a secret clearance.

The questions that appear on the SF 86 that give rise to the potential clearance issue are as follows:

Section 26 of the SF 86 Form

Fortunately, all is not lost with regard to a security clearance as the government directive allows an individual to take affirmative steps to deal with his or her debt issues. Specifically, section 20 of guideline F allows for conditions that could mitigate security certain concerns.

Guideline F Section 20

I always tell my prospective clients to get their credit reports so that they know exactly what the government is looking at when it pulls the credit reports of an individual. Please see this link for how to get your true free credit reports.

Make sure you get all three so you know exactly what is out there. Please read over and note the difference if you are obtaining them for a bankruptcy filing or if you have old debts that you dispute that are showing up on your credit report. This is a critical distinction so make sure you know the difference.

If you are disputing debts that show up on the credit report that are not yours or are paid for, then make sure you familiarize yourself with the Fair Credit Reporting Act as there is a specific, defined way in which to go about the dispute process. Please see my previous blogs on this topic.

If there are debts, however, that you do owe, you may want to consider, as noted in 20 D, a good faith effort to repay the overdue creditors. The phrase or “…otherwise resolve debts” is also the allowance for a bankruptcy filing. It has been my experience that one bankruptcy in a lifetime is acceptable from a security clearance standpoint. Please see this previous blog.  At the time you are in a financial crisis, please write some detailed notes regarding how you arrived in this position since the government will want to know that at some point anyway.   Before you take steps to resolve your financial situation if your concern is with regard to the impact on your security clearance, you may want to discuss your concerns with your facility security officer (FSO) or with an attorney of your choosing.

“If I file bankruptcy, will I lose my security clearance?”

For anyone who holds a security clearance and, as part of their job requirement, has access to classified material, this is the number one immediate question that gets posed to us.  I have written previously on this topic, both from a bankruptcy perspective and regarding general financial considerations of concern to the government when deciding to grant or revoke access to classified material as far as awarding a security clearance.

If you do file for bankruptcy, immediately upon the filing, notify your FS0 that a bankruptcy has been filed by you.  Your bankruptcy attorney should be able to provide a PDF copy of the bankruptcy petition to you by email and you can simply forward that email to your FS0.  Obtaining a security clearance is predicated upon full and complete disclosure so you will do yourself a lot of good by providing this information up front.  Also, as I have stated previously, please write up a detailed synopsis of what brought you to these debt issues.  Of note, the government is forgiving if the cause of financial distress is due from a job loss, divorce, business failure, or something of the like.  Again, in my experience, one bankruptcy in a lifetime will not give a person problems with regard to their security clearance.  I have seen situations where two bankruptcies in a lifetime can be more problematic. This is not, however, an absolute denial of a clearance but it is one that will need further detailed explanation.  In addition, other  issues such as alcohol abuse, use of illegal drugs or criminal conduct, coupled with a bankruptcy, can pose tougher questions from the government as far as whether it should grant someone access to classified material.   You should discuss this with your bankruptcy counsel while you are exploring your options but, if someone has something more than one bankruptcy in a lifetime, then,  in a perfect world, we advise our clients to seek chapter 13 debt consolidation bankruptcy relief and for that person to pay back as much debt as possible.  In my experience, that goes a long way in the security clearance judges’ eyes in being lenient with someone who is motivated and trying to take care of their situation in the best way possible.  There are complicated nuances here in this type of situation so it is best if you discuss the particulars of your own situation with a security clearance and bankruptcy attorney in order to try to craft the best possible outcome for yourself.

Financial issues with regard to the impact on a security clearance are probably one of the top reasons why people run into issues with regard to their security clearance. I have been practicing in this area for several years. I am available for a consultation if you need help in this area.

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