clearance with taxes / debt

I appreciate any advice as I really don’t know much about what would automatically disqualify a person for clearance. It might be too much detail, but I’m dealing with a few red flags I think.
I am interviewing at a company that has positions/ programs with various clearance levels. I’m wondering if I need to disclose that I won’t get a clearance. I don’t know, but I’m nervous that I won’t be approved if I apply. I purchased a franchise in 2015 and I had all the expenses of starting a business and I now have a lot of delinquent debt. I am planning on filing bankruptcy but my lawyer advised that I wait until all of my taxes are filed and through the system. My accountant disappeared with all of my paperwork and we’ve been trying to get everything back together to be able to file both business and personal taxes.
Long story short… I am going to try to file 2015 business and personal in the next week or two, 2016 shortly after, and 2017 should not be anywhere near as complicated so that will also be done in the next month or so. I will not owe any taxes as I did have taxes withheld from my personal paycheck from my corporate position and the amount of deductions will results in nothing owed.
Once my taxes have been filed, and I receive the refunds, I plan on going forward with the bankruptcy (Chapter 7 - the one that dissolves the debt).
Am I pretty much a no go for any clearances? I have had clearance for power generation facilities and headquarters in the past.
Thank you for your help!!

Personally, I would wait until you have completed the bankruptcy process before applying. The clearance process is a whole person review. The circumstances surrounding the bankruptcy would be investigated. It would help your case if the bankruptcy was no fault of your own. There are DOHA cases where people in your situation were granted clearances.

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Bankruptcy in and of itself will not be cause for denial. Circumstances leading to it and following can result in denial. Having an accountant disappear has to be a stressor and that is tough. We put our faith in those managing these things. When they do wrong…it is a bitter pill. Communicate now and often with the IRS as you work through this. Keep meticulous records in neat folders to tell the story. If it is explainable…it can be understandable. You do need to get right on taxes but if the bankruptcy would eliminate portions of that…I too agree bankruptcy with proper legal input is the best course while also working with the IRS to understand what you legally owe and get into a re-payment plan. Even if it is small. Showing good faith goes a long way.

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If you have not mitigated the unpaid delinquent debts, at the time of the application for a clearance, you will not clear.

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Read up on mitigation and consult with a clearance lawyer. If you are going for a Secret or below, I think that you can get through the process as long as you can properly document your troubles. Failed business, like unemployment, illness and other factors can mitigate many financial issues but, I will tell you, you are in for an 18 month process at a minimum. But, this gives you the chance to work on mitigation while your investigation is underway.

Now . . . If you started a business, went out and bought yourself a Maserati, then defaulted on the payments, your going to have a problem . . .


Thank you all for your answers!
If I am offered a position, It sounds like it’s best to not apply for clearance right away. I will hopefully have this option at the beginning. I feel strongly that we will be able to file all years of taxes within the next 2 months and begin the bankruptcy at the beginning of 2019 if not sooner. (fingers crossed)
If a position requires confidential clearance, would I be denied or still eligible? My prior clearance was equivalent to Secret. Will the debt be an issue for a confidential clearance as well? I’m not as concerned about the taxes now as I do have records of everything (except what we didn’t get back from the accountant). Everything since then though is organized and records have been kept.

I would not seek a clearance just prior to entering a Bankruptcy and having active, unserviced debt. But understand the need for income. If you could put some into dispute for now it may delay them. But you want to have a repayment plan in place and evidence showing you are making payments on the required debt. Getting it right and fixed takes priority for now. It is far easier explaining a past glitch if all the taxes are filed, and you are paying on whatever you owe, as opposed to saying you “will get it fixed soon.”