Question

I’m in the military and over the past few years I’ve accumulated a lot of debt. I’m delinquent on most of my accounts (including a car loan and several credit cards) and figure I owe at least $20,000. Can my military security clearance be revoked because I stopped making payments on these debts?

Answer

Yes, it could. Military servicemembers are expected to pay their financial obligations in a timely manner. This means that if you are behind on paying your debts, you could be putting your security clearance at risk -- especially if you haven’t taken any steps to resolve or reduce the debts.

Factors That Can Affect Your Security Clearance

There are many factors, including unpaid debts, which can affect your security clearance. A security clearance adjudicator (the person that reviews your situation and makes a decision) may take any or all of the following factors into account when it comes to granting or revoking your security clearance:

• your personal conduct (including your trustworthiness, candor, honesty, and willingness to comply with rules and regulations)
• your history with drugs and alcohol
• whether you have participated in criminal activities
• your connections and relationships with foreign countries or foreign persons, and
• your financial situation.

Why Your Ability to Pay Debts Is Relevant to Security Clearance

The military figures that, at a minimum, you should be able to handle your own finances if you’re going to be entrusted with national security. If you can’t live within your means, this might indicate a lack of self-control, bad judgment, or an inability to abide by rules.

Will You Lose Your Security Clearance Due to Unpaid Debt?

If you’re behind on paying your bills, you could potentially lose your security clearance. However, there is not a hard and fast rule about this. In determining whether to revoke your clearance, adjudicators look at the totality of the situation, including what you’ve done to mitigate the problem. For example, they will look at:

• the steps you have taken to resolve your delinquent debts (such as obtaining financial counseling or taking other responsible actions to resolve the problem)
• whether your debt was incurred due to reasons that were largely beyond your control (for example, medical debt) or whether it was due to a lack of self control, and
• how quickly you resolved the debt.

Basically, you’ll need to make a good-faith attempt to fix your financial problems if you want to retain your security clearance. The sooner you take action and get your debt under control, the better. (For information on ways to better manage your debt, see Nolo's  Dealing With Debt: An Overview.) To illustrate this point, let’s look at two situations.

Situation 1. Say that, even though you’ve accumulated several delinquent debts totaling over $20,000, you don’t make payments or do anything else to mitigate your situation. In fact, you keep accumulating more debt. Since you haven’t tried to reduce the amount you owe or change your spending habits, you could quite likely lose your security clearance.

Situation 2. Once you realize that you’re around $20,000 in debt, you enroll in a non-profit consumer credit counseling program. You work with a financial counselor to create a realistic budget and start making regular monthly payments to your creditors. As a result, you’re able pay off, settle, or otherwise begin resolving all of your delinquent debts. You also significantly reduce your spending. These actions are indicative of good judgment and demonstrate that you have your financial problems under control. In this situation, your security clearance probably won’t be in danger.

The bottom line is that you need to be proactive in trying to resolve your financial problems to keep your security clearance eligibility.

When to Talk to an Attorney

If you’re in default on your debts and concerned about your security clearance, you may want to consult with a  local JAG attorney.

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