the impact of bankruptcy on my
You won't your security clearance
due to a bankruptcy!
Members of the Armed Forces, employees of the Transportation Security
Administration and others in Federal service or employment have security
clearance to do their jobs.
Section 525 of the Bankruptcy Code states that:
…(A) 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.
United States Air Force Academy Legal Office says about bankruptcy:
The status of your security clearance can be affected, but it is not
automatic. The outcome depends on the circumstances that led up to the
bankruptcy and a number of other factors, such as your job performance and
relationship with your chain of command. The security section will weigh whether
the bankruptcy was caused primarily by an unexpected event, such as medical
bills following a serious accident, or by financial irresponsibility. The
security section may also consider the recommendations and comments of your
chain of command and co-workers. This is an issue that can be argued both ways,
so as a practical matter your security clearance probably should not be a
significant factor in making your decision about whether to file bankruptcy. The
amount of your unpaid debts, by itself, may jeopardize your clearance, even if
you don’t file bankruptcy. In that sense, not filing for bankruptcy may make you
more of a security risk due to the size of your outstanding debts. By the same
token, using a government approved means of dealing with your debts may actually
be viewed as an indication of financial responsibility. Eliminating your debts
through bankruptcy may make you less of a security risk. There is no hard and
fast answer there, with one exception: It never hurts to have a good reputation
with your co-workers and your chain of command.