Exploring Bankrupcty Myths and Misconceptions

As a Sacramento Bankruptcy Attorney, my potential clients are often concerned with the ramifications of filing a Chapter 7 or Chapter 13 bankruptcy Petition. It is my job to help people understand and explain some of the myths that surround this process. Some potential filers may be concerned with the effect bankruptcy may have on any security clearance as a condition of his or her employment. My short answer is: Bankruptcy will have little impact on a security clearance.

The major reason that the Bankruptcy has no negative impact on a security clearance is because it makes a person less of a security risk. The United States Department of Defense states: “The purpose of a security clearance is to determine whether a person is willing and able to safeguard classified national security information, based on his or her loyalty, character, trustworthiness, and reliability.” The fact of the matter is that when a person files for Chapter 7 or Chapter 13 for a legitimate reason, it shows that this individual is making a responsible choice and confronting whatever economic situations are troubling them.

“All available, reliable information about a person, past and present, favorable and unfavorable, is considered in reaching a clearance determination. When an individual’s life history shows evidence of unreliability or untrustworthiness, questions arise whether the individual can be relied on and trusted to exercise the responsibility necessary for working in a secure environment where protection of classified information is paramount.

Using this enumerated statement of principles as articulated from the Department of Defense, one can see that the bankruptcy in and of itself does not create an issue with the security clearance, what ultimately comes into play is the reason for it. People are forced into bankruptcy for legitimate reasons all the time such as illness, layoffs, decreased property values, and divorce. These are circumstances that people encounter through no fault of their own. None of these legitimate reasons for bankruptcy necessarily leads to a determination or finding of unreliability or untrustworthiness. In fact, almost 90% of all consumer bankruptcies are due to legitimate circumstances that the debtor has no control over.

As a Sacramento area Bankruptcy Attorney if you or someone you know has encountered some exceptional circumstances that have made them experience financial turbulence they should consult an attorney familiar and knowledgeable with the principles surrounding the Bankruptcy Code as well as the ramifications of choosing to exercise this option.

Feel free to contact my office at (916) 361-6028 for a consultation.