Military Security Clearance

Certain members of our armed forces and civilian contractors have military security clearance which grants them access to sensitive classified information. When filing bankruptcy, appropriate steps should be taken in order to keep the privilege of being entrusted with confidential information. While there is no hard and fast rule for determining whether you'll keep your security clearance, an experienced lawyer can definitely give you some good guidance so that you can make the right decision.  If a filing could place your job in jeopardy, then it is best not to file right now.  Your lawyer may recommend some planning in order to get you to the point that you can safely file and keep your job.  At the same time, you may not have the luxury of waiting too long, since bad credit, by itself, could strip you of your position.

Effect of Bad Credit and Bankruptcy on Military Security Clearance 

Security clearance allows you to access and review classified government information when accessing or reviewing such information is a necessary part of your job with the military or as government contractor.  Because you are accessing such sensitive information, the government wants to make sure that you to be a responsible citizen, so that you will handle the sensitive information in a responsible manner. Military security clearance therefore commands great responsibility.  For this reasons, having bad credit, by itself, can have a significant adverse effect upon your military security clearance and you could be denied clearance.  In fact, if you are in the armed forces and have bad credit, the military can, and often will, revoke your military clearance solely due to having poor credit. Your security clearance can also be revoked for ignoring your debts, which is equivalent to having bad credit and also shows a lack of financial responsibility.

Bankruptcy Can Save Your Job

Often, in a situation where the military is about to revoke your military clearance due to bad credit, filing a bankruptcy can save your job and help you keep your military clearance.  A military bankruptcy, that is, filing a bankruptcy while you are in the military, shows that you are tackling your debt problems head on.  It shows that you are a responsible person, much more than a person who is in the military and is ignoring his or her debts.

How Bankruptcy Affects Security Clearance

Filing bankruptcy, by itself, will not automatically disqualify you from keeping your security clearance.  The right to file is your legal right stemming from the U.S. Constitution and spelled out by Federal law.  The filing of a bankruptcy prompts the security section to review your financial situation and the circumstances that led to your filing to see whether you are still are a responsible person that can be trusted to responsible handle sensitive classified information.

Mitigating Factors 

If you filed as a result of an unanticipated, unforseen event, then that would be a mitigating factor showing that you even though you filed you still are a responsible person.  For example, a family member may have been involved in an accident and incurred unplanned medical bills that you cannot pay.  If you file to eliminate the medical debt, this wouldn’t necessarily be irresponsible.

Abusive Bankruptcy 

If your filing is abusive, such as if you clearly incurred credit card debt with the intention of filing bankruptcy on it, that would tend to show you are not a responsible person.  For example, if you charged up $50,000 in charges in one year on your credit card for luxuries and then filed a credit card bankruptcy, the security section could likely view this as very irresponsible behavior.  Using your credit cards to buy expensive luxuries that you cannot afford and then filing bankruptcy to eliminate credit card debt does not evidence a responsible behavioral pattern.  But if you just spent your cards for necessities of life and were unable to repay them, that would not show irresponsibility or abuse.


There is no hard and fast rule as to how bankruptcy affects security clearance.  The security section will look at each person's filing on a case-by-case basis to see if the person has been financially responsible or not. 

Job Performance

Your job performance will also be a big factor.  If you are a valued worker, then you will be more likely to retain your security clearance after bankruptcy.

Relationship With Command

Your job performance and your relationship with your chain of command will also be a big factor. If you are a valued worker and you have a good relationship with your command, then you will be more likely to retain your security clearance. 

Level of Clearance

Your level of clearance will also be a factor.  Whether you have top secret clearance versus a lower level clearance, such as secret clearance or confidential clearance, will be a weighing factor.