You have to give up security clearance due to bankruptcy - True?

“What will happen to my security clearance?”

This is the first question federal employees ask to their bankruptcy attorney. And, there is a strong reason behind it. They need to have security clearance for their jobs. So, when employees of federal agencies (especially where security clearance is a must) decide to file bankruptcy, the first question that pops in their mind is about security clearance.

What happens to security clearance in bankruptcy?

Actually, bankruptcy doesn’t affect security clearance in any way. So, if you’re a federal employee, you can be rest assured about it. Bankruptcy won’t create any problem with regard to your security clearance. So, please don’t give importance to those utterly disgusting bankruptcy legends anymore. If you’ve any doubts, shoot questions to your bankruptcy attorney. Otherwise, you can also reach OVLG attorney hub ( to solve your queries.

Do you know why bankruptcy doesn’t make any difference to your security clearance? This is simply because it reduces your security risk.

Ideally security risk is defined as,

“The purpose of a security clearance is to determine whether a person is able and willing to safeguard classified national security information, based on his or her loyalty, character, trustworthiness, and reliability.”

Factors used to determine security clearance

  • Past and present history
  • Both favorable and unfavorable information

Trust and reliability are extremely important especially when someone is going to work for federal agency. If that person’s past history reflects unreliability, then there’s a big problem. He may lose the job because of the trust factor. In a federal agency, security and protection of confidential information are of great importance. If the employee can’t be trusted, then he is simply not fit for the job.

What actually creates a problem

It is not that bankruptcy itself will create security clearance problems. Rather, you’re likely to face problems due to the following reasons:

  1. You’ve scammed people
  2. You’ve filed bankruptcy due to criminal activities
  3. You used to run a Ponzi scheme

The aforementioned 3 reasons prove that you’re a cheater. You can never be trusted and thus there will be problem in getting security clearance. However, if you’ve filed bankruptcy due to the following 4 reasons, then you’re safe. There won’t be any problem with regards to security clearance.

  1. Financial crisis due to your recent divorce
  2. You had a pay cut
  3. Financial crisis due to your family member’s medical issues
  4. You didn’t have any job

Ninety percent people file bankruptcy due to the aforementioned reasons. And, these reasons don’t have any relation to the trust factor also. So, if you’ve filed bankruptcy due to these 4 reasons, then your job will not be at stake.

Does bankruptcy stop you from getting a hike?

Not at all. I was having a chat with a bankruptcy attorney few weeks ago. I asked him this very question and just read what he said,

“Bankruptcy doesn’t stop federal employees from getting promoted. Neither does it stop them from getting a hike. I have worked with people working for NSA, CIA, DOD, armed forces, etc. Not even a single client has complained to me regarding this issue. Rather, they have given me a different story.

You’ll be surprised to know Stacy that it is the security officer who suggests federal employees to file bankruptcy and avoid security clearance issues.”

Why doesn’t bankruptcy create any problem?

You’re filing bankruptcy because of acute financial problems. Unlike many people, you’re not ignoring the problem. Rather, you’re giving due importance to the problem and trying your best to resolve it. So, you’re doing the right thing.

I have just only one advice for you. Don’t hide your bankruptcy filing from security officer. It’ll give a wrong impression.

Final words

Just remember one word. Bankruptcy helps you tackle debt through legal way. It helps you restructure and clear your debt. It reduces your security risk and makes you even more trustworthy. So, don’t worry if you need to file bankruptcy to resolve your financial worries right now.

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