Catastophic financial issues

We had some very serious financial losses, in fact we more or less lost everything but our house, which was also close to going back to the bank, due to extended periods of unemployment and my wife’s very serious (and costly) medical diagnosis. So, despite a clean history for nearly 30 years, on my next PR I’ll be answering “yes” to a lot of questions that I never gave a second thought to in the past. My credit now is a disaster. Is there any reason to think that that will cost me my career and clearance? We retained a bankruptcy attorney, but have been able to work independently with creditors to avoid any further distress, so we haven’t filed either Ch 7 or 13, at this point. I am genuinely fearful that I could see my career completely go away with these events, as I well know the severity of the situation, but we were in absolutely dire straits, and not financially irresponsible. We were simply very unfortunate. We still believe a Chapter filing may be an alternative, but having that mark for the rest of our lives is just terrifying. Can anyone offer some advice? We very much appreciate it.

File for bankruptcy if it’s that bad - this will help you retain your clearance. Remember, bankruptcy is not a bad thing, it’s a legal remedy for responsibly dealing with financial problems.

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Please ask a qualified person for advice such as a clearance attorney.

I will not give you advice on what you should do with your finances. I would also like to note that I am not an adjudicator. However, your circumstances are prime for mitigation. Situations arise in peoples lives, and it does not necessarily rise to a security risk. Just answer honestly to each question, and when you meet with an investigator, explain the reasons for the delinquency. This is a very common issue. I believe the determination is made on the intentions of resolution, what has been done to resolve it and reason for occurrence.

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Understood, and we know it’s a mechanism that many make use of, it’s just a very difficult pill to swallow after a lifetime of pristine credit and financial stability. Also, it will lower my credit rating, again, by about 100 points, if my research is correct.

Can’t really afford an attorney (out of work, as described), so I was hoping there might be an SI or former SI on here who could make a suggestion. We had considered the chapter filing, then held off when I was working, but we’re back in the unemployment line now and I’m terrified that all of those bad marks, even with mitigations in place, just look horrible. And admittedly, I’m a bit prideful about the whole thing, and yes, I know that’s not a smart way to think, it’s just a hard pill, as I mentioned.

Are there any security clearance attorneys in the group willing to dispense a little pro bono input on this? Is bankruptcy a positive thing in the eyes of an investigator and/or adjudicator?

SO much good information on this site, really, some great insights, and thanks to everyone for the help. I think we are going to bite the bullet on this, submit the Chapter filing, and when PR time comes at least I’ll be able to demonstrate that we took serious mitigative action wrt our misfortune and subsequent financial collapse. I HATE the idea of having that on my record forever, but I hate the idea of giving up a clearance I’ve had since I was an Officer Candidate in 1988 even more.

You need to talk to a bankruptcy attorney AND a clearance attorney. Free consults with each should do the job. Bankruptcy isn’t all that it’s cracked up to be. It will stop collections but the debt will remain. It does give you time to breath though.

You may have a fight on your hands and it may result in a lot of stress but unless you screw up in the process you should expect to retain your clearance.

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Thanks, Ed. Yes, as you point out, the debt remains, regardless of what action we take, but we knew that would be the case. Bankruptcy or not, it’s still there. How does one go about finding a clearance attorney? We already have a regular one.

Search locally . . . You will find one nearby if there are cleared jobs nearby.

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Just to note KD, I believe bankruptcy filing is a reporting requirement if you hold a clearance. I think you need to report that to your facility security officer when/if you do file.

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Makes sense. I’ve never been through any of this, so it’s all brand new to me.

The debt doesn’t remain, but the bankruptcy filing will show up on credit records for the next ten years. At least in the IC, the bankruptcy filing itself will constitute an almost automatic grounds for terminating the application process.

My point was that the debt remains . . . It will not be on a credit report, but personal bankruptcy doesn’t mean that debts are forgiven or reduced.

So, you feel like there are for sure some automatic termination grounds? Interesting. I was part of the IC for a good while (former 35D), but have been out of it and in mostly engineering since. This is the first time in decades I’ve had to deal with such disastrous (foreclosure, charge offs, etc) events, and without that clearance, I am virtually unemployable. Honestly, it’s pretty terrifying. Still on the fence about the Ch 11, though.

You mean chapter 13 correct? Chapter 11 is for a business. Chapter 7 wipes out all debt and is a legal remedy to mitigate your debts, it is NOT automatic grounds for removal. Do yourself a big favor and get a free consultation with a security clearance lawyer. I did and although I appreciate the opinions here, a lot of it is misinformation.

@nrc2112 Clearance attorneys lose cases, remember that. Also know that when you’ve retained an attorney and you’re paying them they will tell you everything short of promising you success in your case.

So you have experience with security attorneys? Please do enlighten us.