While federal law prohibits employers from discriminating based on a past bankruptcy, military personnel, or those looking to enlist, may face special challenges after filing a bankruptcy case.
In addition to the normal pressures a person faces when deciding whether or not to file bankruptcy, one's possible military career could be affected by filing a bankruptcy case. This shows up in at least two areas:
- Entrance into the military at all; and
- Assuming that you get in, whether you can advance in your career.
Entrance Into the Military
Let's look at the first hurdle, getting into the military. In today's all-volunteer military, the standard for acceptance is higher than it was during the time of conscription, otherwise known as "the draft." During the Draft, if you could fog up a mirror you could serve your country. Very few people were rejected, and of those the overwhelming majority were denied entrance because of physical health reasons (e.g., flat feet, vision or hearing problems, weak heart, etc.).
Nowadays, many people who don't have the education or ambition to obtain a private sector job look to the military as a good opportunity to get a steady, if not spectacular, paycheck, with good benefits, including health-care and retirement, plus the Montgomery G.I. Bill for college tuition. However, all four branches of the armed services are now scrutinizing applicants for criminal convictions, civil lawsuits, tax liens, and, yes, bankruptcies.
The thinking is that if you are "financially irresponsible" enough to be forced into filing a bankruptcy case, then you might be an easy target for bribery, that is, someone might approach you and offer you money in exchange for giving them military secrets.
Issues With Advancement & Security Clearance
This leads to the second hurdle: assuming you are able to enlist, you may be denied a security clearance and would never be able to advance in your military career.
In other words, even if you could satisfy the recruiters that you had a "good reason" for filing bankruptcy and you were admitted to one of the Services, you might have your "jacket" (military-speak for personnel record) noted that you are a high-risk for bribery and you might very well be prohibited from getting the security clearance necessary for you to work with classified information. Without a security clearance, you would be stuck at the lowest level, non-classified position, with the lowest salary and minimal benefits.