A common question that comes up during the bankruptcy consult for our soldiers stationed at the various bases around southern Georgia is: “how will this affect my security clearance?” While each security clearance has its own criteria for eligibility, there is one theme that is pervasive across all decisions of the security clearance review program (“SCRP”) decisions; the concept of the “whole person”.
The notion of the “whole person” is, on its face, a simple one; the SCRP does not look at a single instance of conduct, but rather reviews the totality service member’s behavior and history. Therefore, a bankruptcy filing will not, in and of itself, disqualify a soldier from obtaining the clearance that they’re applying for, but instead, the security clearance determination will be made after the “whole person” is considered.
A key point in that review will be whether the bankruptcy filing helped (or hurt) the soldier’s “whole person” and made them a better (or worse) candidate overall to have the clearance granted to them. This analysis is further complicated by the individual’s decision to file a Chapter 13 bankruptcy (a repayment plan) or a Chapter 7 bankruptcy (a liquidation of assets).
The Department of Defense Directive Number 5220.6 (“DoD Directive 5220.6”), which applies to soldiers and other government contractors, provides that:
“The ultimate determination of whether the granting or continuing of eligibility for a security clearance is consistent with the interests of national security must be an overall common sense determination based upon careful consideration of [thirteen factors], each of which is to be evaluated in the context of the whole person . . .”
The most bankruptcy-appropriate of the thirteen guidelines is Guideline F. This guideline provides insight for someone in the position where they are now seeking counsel and advice from a bankruptcy attorney. The main concern of the Department of Defense, as it relates to Guideline F is to safeguard against “[a]n individual who is financially overextended [and] is at risk of having to engage in illegal acts to generate funds.” The factors considered by the security clearance review program under Guideline F are:
Conditions that could raise a security concern and may be disqualifying include:
(1) Inability or unwillingness to satisfy debts;
(2) Indebtedness caused by frivolous or irresponsible spending and the absence of any evidence of willingness or intent to pay the debt or establish a realistic plan to pay the debt.
(3) A history of not meeting financial obligations;
(4) Consistent spending beyond one’s means, which may be indicated by excessive indebtedness, significant negative cash flow, high debt-to-income ratio, and/or other financial analysis;
(5) Failure to file annual Federal, state, or local income tax returns as required or the fraudulent filing of the same; . . .
Conditions that could mitigate security concerns include:
(1) The behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur and does not cast doubt on the individual’s current reliability, trustworthiness, or good judgment;
(2) The conditions that resulted in the financial problem were largely beyond the person’s control (e.g., loss of employment, a business downturn, unexpected medical emergency, or a death, divorce or separation), and the individual acted responsibly under the circumstances;
(3) The person has received or is receiving counseling for the problem and/or there are clear indications that the problem is being resolved or is under control;
(4) The individual initiated a good-faith effort to repay overdue creditors or otherwise resolve
debts; . . .
While these criteria are non-exhaustive, it does illustrate that a bankruptcy filing will not, in and of itself, prohibit one from obtaining or retaining their security clearance. This is especially true in the case of the “honest, but unfortunate Debtor” who is putting their best foot forward to responsibly address their debts. If you’re struggling to meet your financial obligations each month, but are concerned about how filing a bankruptcy may affect your current or prospective security clearance, give us a call at Gastin & Hill. Our consultations are always free and we’re always happy to offer guidance to our nation’s service members.