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Will A Bankruptcy Affect A Top Secret Clearance

Departmental Security Officers Or Delegated Officials Are Responsible For:

How Filing For a Bankruptcy Affects Your Security Clearance
  • 6.2.1 Determining departmental or agency security screening requirements in accordance with the criteria established in Appendix B, identifying security screening decisions for which authority should be delegated, and obtaining deputy head approval of these requirements and delegations
  • 6.2.2 Establishing and overseeing the implementation and periodic review of security screening procedures and practices described in the appendices to this Standard, and, when appropriate, ensuring coordination with department or agency human resources management practices, including the following:
  • Aftercare
  • 6.2.3 Using security screening services where mandated or available to meet the departmental or agency security screening requirements, and verifying that the services obtained meet those requirements
  • 6.2.4 Ensuring that the security screening requirements of department or agency positions are reviewed periodically or when new programs or activities are established or substantially modified, and informing security screening service providers of any changes in requirements
  • 6.2.5 Ensuring that security screening requirements of departmental or agency positions that involve the provision of services to client departments or agencies are determined in consultation with the DSO or delegated official of the client department or agency
  • 6.2.13 Addressing issues of non-compliance with the requirements of this Standard in their department or agency.
  • How Does Bankruptcy Affect Your Security Clearance

    If you are active duty military, a government employee, or employed by a defense contractor, then you almost certainly have a secret or top secret security clearance. If financial difficulties overwhelm you and bankruptcy seems imminent, then how will that affect your security clearance?

    Its a difficult question because there is no single answer. Security clearance decisions are generally made on an individual, case by case basis. Guidelines used to evaluate your security risk include:

    • Your allegiance to the United States
    • Any foreign influences in your life
    • Personal conduct
    • Evidence of drug or alcohol use
    • Psychological disorders
    • Financial responsibility

    It is the latter consideration that has most people concerned. The reason why financial history is taken into account is that if you cant live within your means, you might be more inclined to commit illegal acts to pay off your financial obligations. If you are not willing or able to pay your debts, demonstrate frivolous or irresponsible spending habits, or have financial problems due to alcoholism, gambling, or drug abuse, then it may also count against you.

    How financial status is taken into account

    Guideline F in the Department of Defense Directive 5220.6 addresses financial affairs. Paragraph 20 specifically covers bankruptcy filing, and requires that a person initiated a good-faith effort to repay their debts. It gives bankrupts the opportunity to explain how the financial problems arose.

    Finances When Enlisting In The Military

    Each branch of the military has recruitment criteria that will consider your financial background. The requirements ensure that each branch complies with the Department of Defense requirement that “â¦members of the Military Servicesâ¦pay their just financial obligations in a proper and timely manner.”

    The military examines your finances to ensure that you’re responsible, reliable, and trustworthy. Not only is it believed that financial background could contain indicators of these traits, but also that it’s essential to verify that you can live on a military salary.

    Another reason is that someone who struggles financially can be a security risk because of susceptibility to bribery and embezzlement. This factor will be scrutinized closely if a particular job requires a security clearance.

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    The Bankruptcy Law Says So Too

    Finally, I would note that section 525 of the Bankruptcy Code states that:

    ⦠governmental unit may not deny revoke, suspend or refuse to renew a license, permit, charter, franchise or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under the Bankruptcy Code solely because the debtor has been a debtor under the Bankruptcy Code.

    Bankruptcy May Affect Your Security Clearance

    Security Clearance: Debt Can Affect Your Ability to Obtain ...

    Even if filing for bankruptcy relief will not prevent you from joining the military, it can affect:

    • the positions you can qualify for, and
    • your ability to obtain a security clearance.

    In general, decisions regarding security clearances are made on a case by case basis and can take into account multiple factors such as:

    • financial responsibility
    • history of alcohol or drug abuse
    • criminal conduct
  • Trade
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    Protection Of Personal Information

    Personal information created, collected, used, disclosed, retained and disposed of for the purpose of security screening will be safeguarded in accordance with government standards for the protection of personal information, as well as the Directive on Privacy Practices. The level of categorization, and thereby protection, depends primarily on the sensitivity of the reports produced by CSIS or the RCMP.

    Access to, disclosure and handling of personal security screening information is to be monitored, documented, and limited to those who have a need to access it and who have a valid security status or clearance, using appropriate administrative, technical and physical security controls.

    How Will Filing For Bankruptcy Affect My Security Clearance

    Submitted by the Bond & Botes Law Offices – Monday, August 27, 2012

    Many of our clients are active duty military or government employees or employees that work for defense contractors. As a result, many of these prospective clients will have either secret or top secret security clearances which are required for their jobs. A common question we get asked is how will filing for bankruptcy affect my security clearance?

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    Guideline B: Foreign Influence

    The Concern:

    • Having close ties with individuals who are not citizens of the United States could create the potential for foreign influence that could result in the compromise of classified information.
    • Contacts with citizens of other countries or financial interests in other countries could also create vulnerability to coercion, exploitation, or pressure.

    Conditions that could raise a security concern and may be disqualifying include:

    • An immediate family member, or a person to whom the individual has close ties of affection or obligation, is a citizen of, resident of, or present in, a foreign country
    • Sharing living quarters with a person or persons, regardless of their citizenship status, if the potential for adverse foreign influence exists
    • Relatives, cohabitants, or associates who are connected with any foreign government
    • Failing to report, where required, associations with foreign nationals
    • Unauthorized association with a suspected or known collaborator or employee of a foreign intelligence service
    • Conduct which may make the individual vulnerable to coercion, exploitation, or pressure by a foreign government
    • Indications that representatives or nationals from a foreign country are acting to increase the vulnerability of the individual to possible future exploitation, coercion or pressure
    • A substantial financial interest in a country, or in any foreign owned or operated business that could make the individual vulnerable to foreign influence.

    If I Ignore It It Will Go Away

    Does NJ Bankruptcy Affect Security Clearance?

    Applicant held a significant and tardy debt to the U.S. Department of Education for two student loans. He chose not to repay these debts, hoping that it would just go away.

    Eventually he made arrangements to start paying off this debt when he decided it was not going to go away. He also knew that he had to get his finances straight because of his job and security clearance.

    Additionally, the applicant had an unpaid phone bill and ignored payments for over a year until he made arrangements to pay those debts. However, in the SF86 he responded no to the question, Are you currently over 90 days delinquent on any debt? He also failed to provide a list of debts. Clearance denied.

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    Will Filing Bankruptcy Impact My Security Clearance

    Almost once a week I receive the question, Will declaring bankruptcy result in me losing my security clearance? Typically, the answer to this question is no. In most cases, filing for bankruptcy will help you keep your security clearance. Once you file bankruptcy and discharge your debt, you are far less susceptible to blackmail, bribery, or the desire to steal. However, we strongly advise each client considering bankruptcy to check with their employer to ensure that bankruptcy will not negatively impact their career before filing.

    It is important to note, that in the past, some took the position that a bankruptcy demonstrated that the clearance holder could not be trusted. However, that is no longer the case. Today, when awarding clearances, the government considers your current likelihood to become susceptible to blackmail or bribery. As such, if you receive a discharge in a bankruptcy, and thanks to your fresh start you avoided the debt, then you are very likely to keep your clearance. In fact, you would be in a better financial position than you were before the bankruptcy. Nevertheless, if you fall back into high debt right after the bankruptcy, then the government may decide it is a risk to continue your clearance. As such, in most cases, the bankruptcy itself is not the risk, but rather your actions before and after your bankruptcy that could impact your clearance.

    Why Did You Fall Into Debt

    Bankruptcy is not the reason a security clearance is revoked.

    A more important issue is how your debts were incurred.

    For example, debts incurred from gambling or consistently living beyond your means are heavily frowned upon.

    Debts from circumstances outside your control, such as a job loss due to the economy, decreased household income because of a divorce, or large expenses for medical treatment are more easily mitigated.

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    Military Members And The Chapter 7 Means Test Exemption

    To qualify for Chapter 7 bankruptcy, you have to meet specific income requirements, and you’ll prove it by passing what is called the means test. You would typically include your military income in the means test.

    If you are a disabled veteran or are a member of the National Guard or Reservist, you might be exempt from passing the Chapter 7 means test. The exception is limited, however, and has several conditions you must meet.

    Disabled Veteran Exemption

    If you’re a veteran and have a disability, you don’t have to pass the means test if you incurred debts primarily during the following periods:

    • during active duty, or
    • while performing activities related to homeland defense.

    You won’t include the military disability compensation that you received for the last six months when determining your income eligibility for a Chapter 7 bankruptcy, regardless of how much payment you have been receiving.

    Qualifying Disability

    To take advantage of the means test exception, you must have a qualifying disability. You have a qualifying disability if:

    • your disability has been rated 30% or more under the Secretary’s disability compensation rules, or
    • you were discharged or released from active duty because you incurred or aggravated your disability while in the line of duty.

    “Active Duty:” Limits and Exclusions

    Full-time National Guard duty is excluded from this definition. However, if you are in the National Guard, you could still be entitled to the means test exception on a different basis.

    Notification Of A Decision To Deny Or Revoke

    Can You Get a Top Secret Clearance With a Bankruptcy ...

    When a decision is made to deny or revoke an individual’s security status or clearance, the DSO or delegated official, as appropriate, shall send, within 10 days after the decision is made, a written notice informing the individual of the decision. This notice will also include the reasons for the decision and the information on which the decision is based. The individual must be informed of his or her rights to redress. The letter may not involve full disclosure of information where issues of national security are involved or where such disclosure is not subject to disclosure under federal legislation.

    When the decision to deny or revoke relates to a security clearance, the notification must come from the deputy head of the department or agency where the individual is employed.

    Any dispute between the DSO or delegated official and the human resources management unit as to the appropriate action to be taken must be resolved before any action to deny or revoke a security status or clearance is taken.

    Departments and agencies can consult the Treasury Board of Canada Secretariat and their department or agency’s legal services unit about these matters and about the process of notification.

    When a security clearance is denied or revoked, CSIS must also be informed of the decision.

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    Things That Affect You Getting A Security Clearance

    So someone offers you the chance to get into the defense industry ‘pending successful completion’ of an interim security clearance. Perhaps even you already have a Public Trust or Secret security clearance and your next job requires you upgrade to some level of Top Secret.

    Adapted from DSS Guidlines, below are some of the things that will be considered in you getting your Top Secret security clearance.

    1. Financial Considerations. For example, a history of not meeting financial obligations or an inability or unwillingness to satisfy debts.

    2. Emotional, Mental and Personality Disorders. For example, information that suggests that an individual has a condition or treatment that may indicate a defect in judgment, reliability or stability.

    3. Foreign Preference. For example, possession of a valid foreign passport.

    4. Criminal Conduct. For example, felony arrests, multiple misdemeanor arrests or imprisonment for over one year.

    5. Drug involvement. For example, recent drug use, illegal drug possession or drug dependence.

    Not all of the above examples will result in the decline of an interim eligibility. There can be mitigating factors such as a particular behavior was not recent, or it was an isolated incident. Or, in the case of emotional, mental and personality disorders, mental health treatment for a temporary condition such as that caused by a death, illness or marital breakup.

    Adjudicative Guidelines


    Best regards,

    Chapter 13 Bankruptcy And Security Clearance

    • Posted on Feb 19, 2014

    There are forms you will need to fill out with the Military. I have had several client’s from the naval base who have had the same issue. For clients that have debts and debt problems, Guideline F is the applicable provision regarding financial affairs to determine whether there will be a potential problem. Paragraph 20 of Guideline F in the DOD Directive sets forth circumstances that mitigate security concerns. Paragraph 20 states that the individual initiated a good-faith effort to repay creditors or otherwise resolve debts. That paragraph covers the filing of either a chapter 7 or a chapter 13 bankruptcy. Additionally, Paragraph 20 of the Directive can be used to explain how a person got into a financial fix prior to the bankruptcy having been filed. As a general proposition, and in our experience, we have seen that one bankruptcy in a lifetime will not cause any security clearance issues. I hope this helps.

    • Posted on Feb 19, 2014

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    Standard Government Of Canada Security Briefings

    A security briefing is the last step of security screening and the first step of aftercare.

    During a security briefing, individuals are informed of their security responsibilities under the Policy on Government Security and of the access permissions attached to their screening level. Security briefings provide an opportunity for people to ask questions and to develop a better understanding of these responsibilities. A security briefing formalizes the granting of the security status or clearance, as well as the individual’s acceptance of and agreement to abide by the security responsibilities.

    Security briefings are conducted at various times: before an individual takes up his or her duties, when required based on the update cycle, and whenever a change occurs in screening level.

    The Conditions Resulting In The Bankruptcy Are Crucial

    Explaining Your Financial Problems on the Security Clearance Application (SF86) or Interview

    Security clearance adjudicators are human and understand that sometimes life happens. As I alluded to previously, you need to be honest with yourself about why you are in the position of contemplating bankruptcy. Did you get hit by a bus and incur massive medical bills? Or did you finance your champagne taste while earning a beer budget salary? These may sound like extreme or silly examples, but you get the point: be realistic about whether your case will garner sympathy from an objective security clearance adjudicator or judge.

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    Reason #: Personal Conduct

    Personal conduct is conduct involving questionable judgment, untrustworthiness, unreliability, lack of candor, dishonesty, or unwillingness to comply with rules and regulations could indicate that the person may not properly safeguard classified information.

    These types of personal conduct normally result in an unfavorable security clearance determination:

    • Refusal to undergo or cooperate with required security processing, including medical and psychological testing
    • Refusal to complete required security forms and releases, or to provide full and truthful answers to investigators, security officials, and other representatives in connection with a personnel security or trustworthiness determination

    These types of personal conduct may result in denial or revocation of a clearance:


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