Will A Bankruptcy Affect My Military or Security Clearance Status? Two Opinions

22 May Will A Bankruptcy Affect My Military or Security Clearance Status? Two Opinions

Recently in an article in the Army Times, writer and attorney Matthew Tully reported that bankruptcy (he did not mention any difference between filing a Chapter 7 versus a Chapter 13) would affect a servicemember’s security clearance. Later in his article, he advised in his article that a bankruptcy would have an impact but then explained that each servicemember’s case is examined on a case-by-case basis.

Then, he advises that folks with good reasons for money troubles would have those reasons taken into account. “Often, it is not the action (bankruptcy) that hurts an applicant, but the situation surrounding it (running up a credit card tab gambling in Vegas, for example).”

My experience differs from Mr. Tully’s and I couldn’t disagree more with the way the problem was presented.

My issue with Attorney Tully’s article is the first paragraph which answers “YES” in emphatic words but then goes on to explain, “maybe not.”. It has been my experience, having filed bankruptcy for probably over 100 military folks, that the filing of a bankruptcy does not impact their jobs, their clearance, or their future in the military, as long as they are honest with their command and do not try to keep it a secret. On the contrary, one service member client of mine received two promotions during his chapter 13 case. Mr. Tully’s article does go on to explain that the military would consider whether the financial problems started long ago, that the financial problems were caused by outside influences (by a spouse lay-off, for example), or that the servicemember is now trying to get help for the problem.

It has been my experience that going to see an attorney about filing bankruptcy is “trying to get help for the problem”. Unfortunately, Mr. Tully’s article starts off with an emphasis on the negative aspects of bankruptcy and promotes the “shame game” — that only bad people file for bankruptcy, that irresponsible people are trying to avoid their mistakes. It has been my experience that the vast majority of debtors are good people fallen upon hard times. My experience has been that one of the four D’s drive folks into my office:

DIVORCE (leads to loss of income)

DISCHARGE (from employment)(leads to loss of income)

DEATH (of a spouse)(leads to loss of income)

DISABILITY (medical bills, illness, permanent or temporary disability)(leads to loss of income).

I have spoken with Department of Defense investigators who have come to discuss a servicemember’s financial difficulties or their case. It has been their position that a servicemember who is in financial difficulty is a far more serious threat to national security than is one who is taking care of the problem. While there are significant protections for an active servicemember under the Servicemember’s Civil Relief Act, those protections are not available to our reservists. Bankruptcy is available to both active and reservists.

 

Related Posts Plugin for WordPress, Blogger...
The following two tabs change content below.
I'm a consumer protection lawyer in Oregon, working with people in Klamath; Lake; Jackson; Josephine; Curry; and Deschutes County. I speak regularly on bankruptcy and consumer protection issues nationwide.
1Comment

Sorry, the comment form is closed at this time.