How Much Debt Disqualifies You from a Security Clearance?

Technically, any amount of debt disqualifies you from a security clearance, if that debt creates a security concern under Guideline F of DoD Directive 5220.6. This provision considers the amount of debt, but mostly focuses on the circumstances of that debt. Guideline F also includes some mitigating circumstances which, if proved, protect a security clearance from revocation and other adverse action.

A Chicago bankruptcy lawyer stands up for debtors in court when, not if, roadblocks crop up in the bankruptcy process. Furthermore, a lawyer advocates for debtors in ancillary proceedings, such as security clearance action matters. For many debtors, keeping a security clearance in good standing, or obtaining one, is the difference between a good job and the unemployment line. All the while, a Chicago bankruptcy attorney gives debtors solid legal advice.

Possible Issues

Significantly, a bankruptcy filing doesn’t trigger security clearance adverse action proceedings. Federal and state laws prohibit bankruptcy discrimination. Rather, it’s the nature of the debts, as mentioned above, that could be problematic.

• Inability and/or Unwillingness to Pay: Let’s face it. Most bankruptcy filers either cannot pay their debts or don’t want to pay them. Usually, it’s a little of both. Otherwise, they wouldn’t partner with a Chicago bankruptcy lawyer and go through the process.
• History of Unmet Obligations: This factor is present in many bankruptcy filings as well. For example, if Tom cannot afford to make his house payments, he often robs Peter to pay Paul by blowing off his credit card payments and shifting that money elsewhere.
• Deceptive or Illegal Practices: No one files bankruptcy over debts related to fraud or other illegal practices. Since these debts are nondischargeable, bankruptcy is a waste of time. Furthermore, almost no one files bankruptcy over gambling debts or “consistent spending beyond one’s means.” Usually, as mentioned, one debt has a snowball effect.

Based on this discussion, things look pretty bleak for most bankruptcy debtors who want to keep their security clearances. But don’t worry too much. We’re just getting started.

Mitigating Circumstances

Some of the possible issues are common in bankruptcy filings. Fortunately, most of the mitigating circumstances are present as well.

• Uncontrollable Conditions: Most people file bankruptcy due to unpaid medical bills or other circumstances which are at least mostly beyond their control. Likewise, the DoD takes causes like “loss of employment, a business downturn, unexpected medical emergency, a death, divorce or separation, clear victimization by predatory lending practices, or identity theft)” into consideration.
• Undergoing Counseling: The DoD strongly considers financial counseling as a mitigating circumstance. All bankruptcy debtors undergo at least two rounds of financial counseling. Additional counseling is available for those who want, or need, to go above and beyond.
• Remedial Measures: If the security clearance holder “initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts,” the DoD often overlooks any possible issues. This mitigating circumstance is especially easy to show in Chapter 13 protected repayment bankruptcies.

Most people with excessive medical bills and other unsecured debts file Chapter 7. Chapter 13 allows debtors to repay debts on an income-based schedule, and spread those payments out over five years.

 Work With a Thorough Cook County Lawyer

No matter what kind of financial problem you are having, bankruptcy could be a way out. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.

Source:

ogc.osd.mil/Portals/99/DIRECTIVE%202017.pdf