Can members of the U.S. military, or civilians that work on bases, such as Wright-Pat here in Dayton, declare bankruptcy without affecting their security clearances?

Members of the U.S. military, as well as civilian personnel and civilian contractors working for the military, often worry that declaring bankruptcy could result in the loss of their security clearances. Although declaring bankruptcy could possibly affect a security clearance, the good news is that this is not automatic.

Suppose that a Staff Sergeant is stationed at Wright-Patterson Air Force Base (near Dayton, Ohio). He is being considered for reassignment to a new unit, and as a result, the Air Force has initiated a security clearance background investigation into the Staff Sergeant character and conduct. An adjudicator will inquire about the Staff Sergeant’s criminal background and financial responsibility (including credit history), as well as his personal attributes, such as honesty, loyalty, reliability and trustworthiness. Bankruptcy, of course, relates to an analysis of financial responsibility.

The adjudicator will consider the circumstances of Staff Sergeant’s bankruptcy when deciding how much of an impact—if any—it should have on the decision about his security clearance. For example, if the Staff Sergeant declared bankruptcy to avoid the debts he accumulated as the result of his compulsive gambling, then the bankruptcy would likely have a negative impact on his security clearance. On the other hand, if Staff Sergeant Nelson’s debts resulted from a sudden medical emergency or other unexpected event, then the bankruptcy might have little or no impact on his security clearance. In other words, the fact that Staff Sergeant Nelson declared bankruptcy is probably less important than the reasons he got into debt in the first place and how he tried to manage that debt prior to filing his bankruptcy petition.

If you are a member of the U.S. military and are considering bankruptcy, then you should consider speaking with an attorney who focuses on bankruptcy law. Your attorney can help you through the bankruptcy process and can explain the circumstances of the bankruptcy to your commanding officer and investigative personnel, pointing out that bankruptcy is a full, legal discharge of all your debts. In many cases, bankruptcy is the most financially responsible means of dealing with your debts.  Call 1-800-596-1533 for a free consultation from an experienced Ohio Bankruptcy Attorney.