Filing bankruptcy in order to keep my security clearance

[Anonymous]

I have a top secret clearance. I have a lot of debt. I am nearing my 5 year reinvestigation and I am freaking out about what to do. I make 107k and I am about 50k in debt, most of which is tax debt. I am divorced with 3 kids living at home. My bad marriage/divorce is what put me in debt and I have ultra slowly been digging myself out (250 a month towards back taxes). I went to see an attorney and chapter 13 is my only option due to my income. If it were not for my clearance I would not file and would just continue to pay the debt off slowly. Does anyone have any ideas on other options that I may not be considering?

[Anonymous]

I didn't think that it's could be discharged in bankruptcy.

[Anonymous]

Tax debt ^^

[Anonymous]

Your explanation is valid. They will see you have a plan.

[Anonymous]

Have you talked to your FSO to see what the impact of filing will have regarding your clearance?

[Anonymous]

I thought at most agencies the bankruptcy is more of an issue with your TS clearance because it shows a documented problem with finances and an exploitable financial vulnerability? Did you check with your security department to confirm the filing wouldn't be a bigger problem?

[Anonymous]

I don't think you can discharge tax debt - is this income tax debt?

[Anonymous]

i used to adjudicate clearances. The bankruptcy itself isn't the issue, and I don't know that chapter 13 will help you because it is tax debt, and you are already paying it back. Telling people that filing bankruptcy in and of itself could make them lose their clearance is how people get into these terrible situations. I would be more worried about how someone got that far in the hole with taxes. Was it a lack of filing? Because THAT could cost someone a clearance unless you address it right now.

What you should do is go to your agency's EAP program and get financial advice. You have a financial issue but what they need to see is a good faith effort to pay it back. They need to see you embracing this and working on it-not running away. Going to EAP really faces the issue and shows a willingness to work on it. Whatever plan you come up with for repayment, make sure you stick to it and document your progress.

Also-depending on which agency you are cleared with, that 5 years means nothing. My last re-investigation was over 10 years ago.

[Anonymous]

Anonymous wrote:I don't think you can discharge tax debt - is this income tax debt?

Yes state and federal. I set up a payment plan for the Federal, which I have paid consistently for the past 3.5 years. I've paid it down 10K, but still have 5k more. The state wanted me to put down way more than I could afford to pay at once, plus I couldn't afford the monthly payments that they set up for me. I figured I would start paying that once I am done paying off the federal bill.

I hate the idea of filing chapter 13, because there is zero benefit to it since I have no assets that I am trying to hold on to.

[Anonymous]

Anonymous wrote:i used to adjudicate clearances. The bankruptcy itself isn't the issue, and I don't know that chapter 13 will help you because it is tax debt, and you are already paying it back. Telling people that filing bankruptcy in and of itself could make them lose their clearance is how people get into these terrible situations. I would be more worried about how someone got that far in the hole with taxes. Was it a lack of filing? Because THAT could cost someone a clearance unless you address it right now.

What you should do is go to your agency's EAP program and get financial advice. You have a financial issue but what they need to see is a good faith effort to pay it back. They need to see you embracing this and working on it-not running away. Going to EAP really faces the issue and shows a willingness to work on it. Whatever plan you come up with for repayment, make sure you stick to it and document your progress.

Also-depending on which agency you are cleared with, that 5 years means nothing. My last re-investigation was over 10 years ago.

This is very helpful, thank you! I have filed my taxes. My mistake was keeping my exemptions really high for to long. For a time during my marriage I was the only one working, due to my husband becoming ill. High exemptions times 4 kids to take care of (oldest child is now on his own), was the only way that we could get by. I reported this to my CSO, so they have records of the financial hardships and his illness. I hate having to report stuff. I understand why I have to do it, but it is so embarrassing.

In regards to the reinvestigations, I have been at my agency for 18 years and have gone through two.

[Anonymous]

OP, from what you've posted, you needn't freak out on security clearance grounds. If the explanation for your problem is true and you can demonstrate several years on a negotiated payment plan, you should be just fine.

Now, if the debt is tied to cash credit card advances from machines on the floor of a casino, that would be another story altogether.

[Anonymous]

No matter what you do I think your clearance will be revoked

[Anonymous]

Anonymous wrote:No matter what you do I think your clearance will be revoked

Disagree. Financial difficulty tied to spousal illness that is being addressed in a responsible way does not make one a threat to national security.

[Anonymous]

OP-adjudicator here again. Don't freak out too much-I really think you will be ok. I know it's embarrassing to disclose to EAP or security, but taking charge of it is the biggest factor. I don't see a benefit from chapter 13 right now-and you have paid off a great deal of your previous tax debts. That is awesome! I would just try to get some kind of arrangement with the state taxes in writing if possible.

It sounds to me like you made the best choices you could under your circumstances. You are taking ownership and showing good faith effort to resolve the issue and not let it happen again. You have some extenuating circumstances as to how you got into the financial situation, and it wasn't that you were unwilling to pay the debt but got in a situation where you have medical issues and a divorce impacting your finances. This is all taken into consideration.

I would write out an explanation for how this happened and what steps you have taken to resolve it so far and what you have planned for the future. You can submit that with your SF-86 during your reinvestigation. It always helps to provide as much information as possible and be honest, transparent, and forthcoming with any concerns. Don't be scared. A lot of people have gone through serious financial hardship and come out on the other side with their clearance intact. Keep your head up and keep making progress. You are doing great so far. Best of luck to you!

[Anonymous]

Anonymous wrote:OP-adjudicator here again. Don't freak out too much-I really think you will be ok. I know it's embarrassing to disclose to EAP or security, but taking charge of it is the biggest factor. I don't see a benefit from chapter 13 right now-and you have paid off a great deal of your previous tax debts. That is awesome! I would just try to get some kind of arrangement with the state taxes in writing if possible.

It sounds to me like you made the best choices you could under your circumstances. You are taking ownership and showing good faith effort to resolve the issue and not let it happen again. You have some extenuating circumstances as to how you got into the financial situation, and it wasn't that you were unwilling to pay the debt but got in a situation where you have medical issues and a divorce impacting your finances. This is all taken into consideration.

I would write out an explanation for how this happened and what steps you have taken to resolve it so far and what you have planned for the future. You can submit that with your SF-86 during your reinvestigation. It always helps to provide as much information as possible and be honest, transparent, and forthcoming with any concerns. Don't be scared. A lot of people have gone through serious financial hardship and come out on the other side with their clearance intact. Keep your head up and keep making progress. You are doing great so far. Best of luck to you!

This is quite possibly the kindest response that I have seen on this site! Thank you very much for your non judgemental and encouraging words!