![]() In contrast, if your bankruptcy is linked to a criminal conviction (e.g., a DUI) or a history of irresponsible behavior (e.g., gambling), then your clearance may be at risk. The military wants to ensure that all personnel with a security clearance are “financially responsible.” If investigators see that your bankruptcy resulted from a one-time hardship (e.g., divorce), then your security clearance is unlikely to be affected. ![]() Your reason for filing is what matters most to a security clearance. It involves reorganizing your finances over three to five years and can include taking money out of your paycheck - called “wage garnishing.” Chapter 13 is usually for debtors with higher incomes. Chapter 7 is the most popular option, partly because you can turn over property and assets rather than pay back debt out of pocket. The chapter you choose to file under depends on how much debt you have, your income, and your timeline for repayment. The Servicemembers Civil Relief Act (SCRA) lets courts postpone or “stay” legal proceedings - including bankruptcy - for active-duty service members for up to 90 days after they return home.Ĭhapter 7 is a simpler, faster version of Chapter 13. While bankruptcy does lower your credit score (by up to 240 points) and stays on your credit report for up to 10 years, filing is better than digging a larger financial hole or, worse.īankruptcy proceedings can be stopped when you’re activated. ![]() The first and most important thing to know is that bankruptcy was designed as a solution - a way to do something about debt that has become unmanageable. Ready to learn more? NFCC-certified counselors are available and ready to assist you with your bankruptcy questions. Read the following facts to help get informed before you file. While you enjoy certain advantages over filing as a civilian, an improperly handled bankruptcy may have an impact on your security clearance. There are pros and cons to filing when you’re in the military. According to the National Bankruptcy Forum, more than 750,000 Americans file for bankruptcy each year, as do 1 in 10 active-duty personnel. If you’re a service member or military veteran considering bankruptcy, you’re not alone.
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