Security Clearances and Debt Settlement Plans

By Ronald C. Sykstus

Ronald Sykstus

This is a recurrent ad for debt settlement companies that advertise services to help people resolve debts:

“Call our 800 phone number now and we can negotiate with your creditors under a little-known government program that will reduce your credit card debt and it is the secret that the credit card companies don’t want you to know.”

For anyone who has a credit card balance, and especially if they are falling behind on their credit card payments, this sounds very enticing. As the saying goes, however, if it sounds too good to be true, it probably is. I have been practicing consumer law for over 30 years and I still don’t know what this “secret” is or how it is supposed to magically work.

If you hold a security clearance or are trying to get a security clearance and you are falling behind on your debts, is there any problem with you using a debt settlement company that advertises like this to resolve your debts? The short answer is yes, this can pose a big problem for you as a relates to your security clearance. Financial issues are the number one reason why people lose or are denied security clearances. As a result, it is critical to do a lot of research regarding this topic if you find yourself in financial trouble.

This YouTube video and blog post explains our perspective on debt settlement companies and plans. As a relates to a security clearance, this can be a big issue for someone regarding their clearance for a variety of reasons. First of all, the debt settlement companies tell you to stop making your payments immediately and that they will take over the debts. This then results in your credit being harmed immediately. Almost all security clearance holders now are under continuous evaluation, so the government has access to your credit reports at all times. You could have a real problem as soon as the government sees that you are missing credit card payments. The second problem is that not all of your creditors have to agree to a debt settlement resolution and, in fact, a lot of them won’t. They will still call you, write to you and potentially sue you if you fall behind on their particular debt. Additionally, debt settlement companies are unable to include a number of debts in their settlement plan to include secured debts like mortgages, vehicles and credit union debts because credit unions refuse to be part of this type of settlement. Finally, you end up NOT paying your debts in full which will, in my experience, be a problem for the government as it relates to your clearance.

You will want to think long and hard about your approach to your debts, especially if you are falling behind or if you see that you will get to that point. I have written previously about financial issues and security clearances, and you can read that information here and here. I would not discuss your financial concerns with your supervisor or Facility Security Officer (FSO) since you very well may put them in a position to have to report to the government that you have relayed that you are having issues with your debt situation. I recommend discussing your situation first with a lawyer so that you have the attorney-client privilege to protect you and then you can figure out the best approach to address your financial condition. You need to approach this slowly and methodically to make sure you do everything in your power to protect your security clearance. At a minimum, if you have a security clearance or are trying to get one, before you enter into a debt settlement plan, do a great deal of research so that you know all of the ins and outs of the process and potential effect on you and your clearance.

If you are concerned about your financial situation as it relates to your security clearance, please feel free to reach out to me immediately BEFORE you take any steps in attempting to resolve delinquent or soon to be delinquent debts. A consultation with me is protected under the attorney-client privilege and only you and I will know what we discuss. I will work with you to help you explore the best possible resolution of your debts and the impact all approaches could have on your clearance.

Also, if you are early in the clearance process, and you are at the stage of having to complete an initial or renewal SF 86 form through e-Qip, and you have questions or concerns about how to disclose financial issues, delinquencies or concerns in your life, please reach out to me immediately BEFORE you answer those questions. A consultation with me is protected under the attorney-client privilege and only you and I will know what we discuss. To that end, I strongly recommend that you do not discuss any security concerns with your chain of command, civilian supervisors, or anyone else since, reporting any type of potential issue to anyone else, may require them to forward that information along to the facility security officer. Before you decide to do anything like that, and if you think you have an issue that needs to be disclosed either on the SF 86 form or by self-reporting, let’s discuss it first before you do anything. We can have a meeting (by phone or in person) protected by the attorney-client privilege so that we know exactly what all of the issues are and we can ensure that, together, we can control the narrative of exactly what you are reporting or answering. Please feel free to contact me by phone or text at 256-713-0221 or by email at if you would like to discuss any concerns that you have regarding your clearance. My goal is to put any security clearance issue and concern that you may have to rest at the earliest and lowest possible level.


“Security Clearance Issues, Problems, Denials and Revocations” – author.

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