INSIDE THE 
NEWS + ADVICE
Financial Issues and Your Security Clearance
In this economy, it is not uncommon for individuals to have delinquent debts reflected on their credit report. Credit cards are the most common source of delinquent debts. However, as times become tough, Americans are having problems paying debts such as mortgages, car notes, student loans, and taxes. Delinquent debts for any of these types of creditors can negatively impact your periodic reinvestigation.
The Background Investigation
The Standard Form Questionnaire 86 (SF86) has a number of questions on it related to your history of past due debts. The questions are intended to elicit responses related to prior bankruptcies, debts that have been referred to collections, debts that have been charged off, and debts that have been delinquent for at least 180 days, just to name a few.
Before you meet with an investigator, the Agency will review your credit report. When you meet with an investigator, you will be required to thoroughly discuss all delinquencies listed on your SF86, as well as delinquencies on the credit report that you failed to disclose on your SF86. Some questions you will be asked for each delinquent debt include:
- When was the debt incurred?
- When did the debt become delinquent?
- Why did the debt become delinquent?
- Was the delinquency due to circumstances outside of your control?
- What, if any, attempts have you made to reduce or eliminate the debt?
- When do you expect to fully pay off the delinquency?
- Who knows about the delinquency?
Your responses to these questions will assist an adjudicator in making a determination as to your eligibility.
Before You Submit Your Security Clearance Application
1. Make sure that you have reviewed your credit report.
The last thing you want during a subject interview with an investigator is to be surprised about any delinquencies listed on your credit report that you were unaware of. Below are examples of situations which may result in unknown debt:
- Prior or current marriage in which you are unaware that your spouse created debt;
- Medical bills that you were unaware were referred to collections;
- Prior rental or utility bills in which you were unaware that money was still owed;
- Debts that were paid in full but were not properly updated on your credit report; and
- Identity theft.
A defense of, “I didn’t know about that debt” is not an acceptable mitigating condition. Security clearance holders are held to a higher standard, and therefore are expected to know whether or not they owe debts to any creditors.
2. Pay off your debt or have a payment plan in place:
If you owe delinquent debt to a creditor, you obviously want to try to pay this off before your background investigation. However, if you are unable to do this, the next best thing is to at least have a payment plan with the creditor in place. Adjudicators are not only concerned about the amount of delinquent debt you owe, but are concerned about what attempts you are making to resolve the debt. This speaks directly to your responsibility, which is highly regarded by adjudicators.
Whom to Contact to Assist with Further Debt Resolution
Depending on your level of debt, you may have difficulty resolving it on your own. In that instance, you may want to consider one of the following:
- Credit counseling
- Debt consolidation loan
- Bankruptcy
A credit counseling service will provide you with advice on how to manage your money and offer solutions for your current financial situation. A debt consolidation loan is exactly as it sounds: all of your debt is consolidated into one loan so that you make one monthly payment rather than multiple payments to multiple creditors each month. The loan you obtain to consolidate your debt may have a lower interest rate than what you are paying to your creditors.
Although you may think that having a bankruptcy on your credit report will negatively impact your security clearance, this is not necessarily the case. The advantage to a bankruptcy is that it eliminates your delinquent debt (Chapter 7) or creates a payment plan to pay off the debt (Chapter 13).
Be Able to Explain the Reason for the Delinquency
Eliminating or having payment plans in place to pay down the delinquencies is only one aspect of mitigating your financial delinquencies. Additionally, you will have to explain the reasons for your delinquency. Adjudicators are not only concerned about your susceptibility to bribery because of your debt, but are also concerned about the reasons for the delinquent debt. The reasons for the debt provide further insight as to your judgment, reliability, and responsibility. Delinquent debt due to reasons outside of your control will be more favorably viewed than delinquent debt as a result of irresponsible frivolous spending.
Greg Rinckey is the Managing Partner of Tully Rinckey PLLC, one of the largest federal sector employment law firms in the country. Greg is a recognized leader in the military and federal employment law sectors. Nicole Smith, Tully Rinckey Associate, represents government employees and contractors in a wide range of security clearance matters, with a concentration on application and interview counseling. Nicole spent nine years as a national security background investigator. Follow Tully Rinckey on Twitter @FedLawSource.
Why do they not tell you why they pull your clearance. I have been fighting this for almost a year. Have a lawyer, and have taken care of my credit with a lawyer there also. Any help in what direction I can go now
If your clearance was formally suspended or revoked, then you should have received a Statement of Reasons, Letter of Intent to Suspend, or similar type notification from the Agency which would enable you to appeal any suspension or revocation. Without knowing your specific circumstances, I do not know why you are unaware of why your clearance has been pulled. This is not legal advice. Get in touch with the Tully Rinckey PLLC Security Clearance Team to discuss your situation further at 202-787-1900 or [email protected].
I have had a security clearance since 1999. First a Secret, then upped to TS in 2009. In 2009, both my spouse and I were laid off and as a result of having 0 household income, I had 2 credit cards that went into default. In addition, because of a job move in 2006 and a soft real estate market, we could not sell our house when we relocated, but had to rent it out which caused a -$600 deficit to us each month. When we lost our jobs in 2009 and our renter stopped paying, we tried to sell the house, but in the end had to let the bank voluntarily foreclose on it. We have been trying since regaining employment to make payments to these credit card debts, but all of this obviously still shows up on my credit report, and now my TS clearance is up for 5 year renewal. It has just gone inactive and a re-review is pending. Is there any possibility that I will be granted an interim TS, and/or is there any possibility that I will be able to get my clearance (which I’ve had for 15 years!) renewed? Also, I saw that there is a phone number that I can call to find out the status of an investigation. Is there any point to calling this #?
Thanks,
Killian
If your credit report reflects current delinquencies, it is unlikely that you will be granted an interim clearance, and possibly even a final clearance, depending on the amount of the current delinquent debt. However, there are certainly other factors that an adjudicator takes into consideration when making a determination as to whether a clearance should be granted when financial delinquencies are of concern.
If the number you are referring to is the number to the Central Adjudications Facility, the only information they will possibly provide is whether an investigation is open or closed. It is unlikely that anyone there will advise you regarding the likelihood of being granted a clearance.
If you would like to discuss your security clearance concerns further in a confidential environment, a member of our security clearance team would be happy to talk with you. We can be reached at 202-787-1900.
I am currently a Federal Contractor working in the same position for the past 7 years and I have a Confidential Clearance SF-85. My organization now wants to bump everyone up to Secret SF86.
I have no criminal record.
I cannot think of anyone that would give me a bad reference.
I however do have a $350 cell phone collection on my credit report that I paid off 5 years ago.
I have a Judgement against me from a major creidt card that did a charge off on me for $17k that is listed on the report. I paid this judgment and it is marked as paid. I actually paid $5K to settle it 3 years ago, but it is paid.
I also paid $5K to settle another major credit card that a collection agency threatened to sue me for unless I paid. This has since dropped off my credit report.
Question. Since I have paid and are now square with everyone and the only debt I have is my mortgagae with NO missed payments for 10 years and I am clean on the criminal side of things. How do my chances look to get approved for Secret?
Based on the information you have provided, your chances of being approved a Secret clearance are good since you are not currently delinquent on any debts. However, when it comes to financial delinquencies, agencies also want to know the reason why the debts became delinquent in the first place. If the delinquencies were due to irresponsible or frivolous spending, this could negatively impact your eligibility as the agency will question your judgment and responsibility. However, if there is no current or recent indication of irresponsible spending, then the passage of time may mitigate the agency’s concerns. This information does not constitute legal advice.
I currently have an interview with the secret service coming up in a week. I have no criminal history at all, I have 1 credit card that I use as a debit card in which I pay off the entire balance when its due, But i have a collection. The collection is for 17k and it is from college. Long story short, my father co-signed for my loan and we didn’t get approve so we have no immediate way of paying out of pocket 17k. I am making monthly payments in trying to get rid of this collection. Now how bad will you think that will hinder me from obtaining a Top Secret Clearance?
My husband is filling out the SF86 online using the e-QIP system and it is asking for my SS#. Do they run my credit?? I was wondering why they are asking for that info. Please help
No they WILL NOT.
I have two collection accounts that are listed as paid ($460 combined), a credit card that was charged off ($1100)and multiple late payments on a vehicle loan. I am currently in a payment plan to pay off the credit card charge off. The vehicle loan has been fully paid off and I now own the vehicle. All of these financial issues coincided with a very nasty divorce. I am coming due for my 5 year TS reinvestigation. As long as I provide documentation and am honest, do I have a decent shot?
Hi, I recently have filed online via the e-qip side for the sf86 form and now have a scheduled meeting with someone for my clearance. I just recently decided to check my credit even though I know I am in good standing although there is a delinquent unpaid bill of $100 from a medical facility that I had no idea about. No one has ever tried to contact me via mail or cell phone which I have had for years and years. I plan on paying it off immediately. By bringing proof of payment with me to my sit-down meeting, will this do me any good, or is it too late?
Hi,
I am trying to find out if owing money to the IRS will prevent me from getting a Secret Clearance? I cannot find anything on the web about owing money to the IRS and getting a Secret Clearance. Everyone I talk to has a different answer to this question.I currently have a SF85 Public Trust that I had no problem getting. I was told by the Security office where I work that if I ever needed a Secret Clearance I can tell them that the investigation is complete and wont have to go through it again. But Im not totally sure abouy that. I have a payment plan and pay on time every month. Can someone please tell me if owing the IRS money will prevent me from getting a Secret Clearance?
It is important that you have a plan and are following through. The Federal government takes tax issues seriously, so your efforts to repay the tax debt weigh in your favor. Tax debt is not an automatic disqualification. If you would like to speak further with a member of Tully Rinckey PLLC’s National Security Law Practice Group, call (202) 787-1900. The information provided here does not constitute legal advice.
I am a candidate for a government job requiring an interim secret clearance. I filed Chapter 7 Bankruptcy 3 monrhs ago on a foreclosure. When we purchased the home, it was riddled with necessary repairs and unsafe health conditions – asbestos. I have no other financial issues other than the foreclosure…Concerned.
Steve, you are legitimately concerned about your financial history because it is definitely considered when evaluating your clearance eligibility. However, it is possible to mitigate debt matters despite a rough set of circumstances. In your case, the bankruptcy and foreclosure sound like circumstances that were outside of your control. The clearance adjudicators are mostly concerned about financial problems caused by irresponsible behaviors – not paying bills on time, living above your means, not planning appropriately. I would make sure you accumulate all of your documentation on the matter so if you are interviewed regarding the circumstances, you are ready with documentary proof showing that the bankruptcy was caused by a legitimate legal situation, and not irresponsibility. If you would like to speak further with a member of Tully Rinckey PLLC’s National Security Law Practice Group, call (202) 787-1900. The information provided here does not constitute legal advice.
I have a clean record and a great credit score with good history. I would like to apply for a few clearance jobs but I have a question which relates to timing. I have several years of unfiled tax returns. I am seeing answers in both directions… (IRS records are checked and IRS records are not checked) which is right? I really want to file and pay my penalties, but it would be a lot easier with the paycheck which would come from the cleared job (big pay increase). Should I file and then apply or not worry about the filing yet, get the position and then take care of the filing?
Dane, Filing income tax returns and paying outstanding taxes is a very important matter considered in the security clearance process. It is a major factor considered under Guideline F of the Adjudicative Guidelines. Investigative agencies definitely check whether you have paid your taxes. There are times when a person isn’t legally required to file tax returns – usually it depends on the amount of income you earned. Most of the time, however, federal law requires every wage earner to file the returns. So, if you haven’t filed your returns you are in violation of federal law. I recommend that you file your returns and pay your taxes as soon as possible if you are interested obtaining a security clearance. Please also remember you will mostly likely still have to explain why you didn’t timely file or pay your taxes. I recommend that you seek legal advice regarding this issue. If you would like to speak further with a member of Tully Rinckey PLLC’s National Security Law Practice Group, call (202) 787-1900. The information provided here does not constitute legal advice.
I also completed an e-qip for a federal govt job, I am a federal contractor but still had to go thru the clearance process. I recently just started working. I recently met with an adjudicator to go over the answers to my questions on the e-qip. My husband was worried that I had to list his SSN# because he owes IRS (prior to us getting married), but we file our taxes separately, and I do not owe IRS.will this affect my public trust background check??? Will this tax fent show up on my husband credit check? I dont think IRS tax debt shows up on credit checks, ( he is worried).
Generally, debt problems of people unrelated to you will not create a security clearance concern. However, when you marry you automatically create financial associations with your spouse. Examples include owning and purchasing property, obtaining loans, and having joint bank accounts. Keeping that in mind, even though you did not personally create the tax burden, it affects you because your marriage. One of the considerations of the adjudicator is whether you are a risk to engage in illegal acts to generate funds. Any time you are closely connected to a person with financial problems, you are at risk of being drawn into compromising circumstances. I recommend assertively addressing your husband’s tax burden so that it does not cause you clearance problems, and be prepared to thoroughly explain your position to the clearance investigator. If the debt has been turned into a tax lien, it will show on your husband’s credit report and may show on your report if you jointly own real estate. If you would like to speak further with a member of Tully Rinckey PLLC’s National Security Law Practice Group, call (202) 787-1900. The information provided here does not constitute legal advice.
How does rental/utility bills you didn’t know you owed differ from “I didn’t know about that debt?”
One of the most common concerns in security clearances cases involves unpaid debts. It is very common for applicants to discover unknown debts during security investigations. Rental assessments and utility bills, for example, typically affect those who move a lot. I encourage reviewing your credit reports on a yearly basis, and follow up with landlords and utility companies when you move ensure all unpaid balances are satisfied to avoid collections. Adjudicators will generally mitigate a debt issue as long as you handle it appropriately. Ignoring unpaid debt, or claiming a lack of knowledge about it, is not an acceptable justification. If you would like to speak further with a member of Tully Rinckey PLLC’s National Security Law Practice Group, call (202) 787-1900. The information provided here does not constitute legal advice.
I am currently trying to fill out a SF 86 and have gotten to the tax questions. Last year, I have filed but I accidently filed late because of life. I originally requested an extension but went past that. Well, we have always made payment arrangements because one year we had a lien placed on our house but paid it immediately. Is paying/filing late the same thing as not filing?
No if you have made arrangements to pay 2015’s tax that should suffice. Attach full documentation with the eQIP (SF 86).
How do all of the elected officials in Washington D.C. that dodge their debts and taxes for years and still manage to keep their jobs and their security clearances?
Will getting a signature loan to consolidate credit card debt and lower monthly payments affect my security clearance investigation? I’m have no late payments and I haven’t spoken with an investigator yet.
Financial considerations security concerns are mitigated by a showing of good faith efforts to resolve debt. You may have debts, even delinquent debts and still obtain a clearance. The issue is whether or not you have worked with creditors to resolve those debts. Document everything. The government wants documentation not your testimony.
I have defaulted student loan debt that has been paid through garnishment. Does this automatically disqualify me from a federal job and/or clearance?
May or may not. Is the loan paid in full? If not how long have you been paying by garnishment? What is the balance? When will it be paid off? All that is required is to show you have made a good faith effort to resolve debt. Paying by garnishment may not be a preferred method but it is a legitimate method of resolving indebtedness.
How they check tax return history.Did they get transcript from IRS each year?
The background checks involve sweeping hundreds of federal databases. They have access to your IRS records. That is why one should always fully disclose information on the eQIP.
I have debt form a marriage and have not had a home for many years, when I would live somewhere I would report my address change and then have to move again. My ex husband allowed two cars to get repossessed and racked up a lot of debt in my name. Will this disqualify me from getting my security clearance with eqip?
It could. It depends upon how much unpaid debt there is, how delinquent are any payments, and what steps have you taken to work with creditors? It is up to you to make good faith efforts to resolve indebtedness.
How unfavorable is it to file a Chapter 7 bankruptcy though no accounts ever go into a 30+ late status, compared to filing after many accounts go delinquent? For example, someone paying for years the minimum payments due in an effort to not go delinquent, taking credit education courses, etc, until just no longer able to make all payments and still provide for the basics. Is there any difference how that might be viewed come time for adjudication? Underlying reasons for debt load revolve around changing jobs with a period of severe underemployment which is now corrected couple with inability of spouse to work due to health issues in treatment. Debts are all CCs and 2 vehicles. No tax issues, collections, or real estate.
Did you consider a Chapter 13 Wage Earner Plan? A bankruptcy is a method of resolving debt but if you could afford a Ch 13 but filed a Ch 7, I’m not sure what the result might be. The government will argue you were capable of paying your creditors under Ch 13 and therefore filing a Ch 7 you are walking away and stiffing your creditors which could result in the loss of your clearance.
Can one obtain an interim security clearance or a clearance, with delinquent accounts on your credit history and the person has made payment plans.
It depends upon the facts and circumstances. If you can demonstrate that you have made a good faith effort to resolve debts you might obtain a clearance. Written repayment agreements are good evidence. But it can also depend on the ratio of debt to income, circumstances giving rise to the debt and the like. This cannot be answered definitively without having more information.
One additional thought is if you have made a strategic default on a real estate loan that could be grounds to lose a clearance. A strategic default is the decision by a borrower to stop making payments (i.e., to default) on a debt, despite having the financial ability to make the payments. This has come up more often since the real estate market went down and some home owners were upside down on their mortgages. Ones who consciously walked on mortgages fall into this category.
I just recently retired on 1 Nov 16 after 25 years of selfless service in the Army. I have just been offered a civilian GS job at the same organization I just left from in Korea. I had a Secret Clearance then that I renewed in 2014. Will this current Security Clearance help in this job selection? I believe they said they would do another BI or something to that effect. My credit while in Korea the past 2 years took a huge nose dive due to my wife being laid off and her mismanagement of our finances while I was away. Hoping that my current clearance would help in securing this position. Any thoughts out there.
If your break in service is less than two years you will not have to go through a complete adjudication for another clearance. If you can show you have made a good-faith effort to resolve indebtedness you should be ok; BUT never assume an adjudicator will use common sense. Repayment agreements, copies of cancelled checks (front and back), and/or statements showing payments are necessary. The government wants to see documentation of debt payment.
I just got hired for a government agency. They asked me to do the e-quip. I have everything. The question is i just filed for bankruptcy. Due a lot of medical bills and a couple credit card. Is this going to stop me from getting this job
Not necessarily. Chapter 7 or 13 bankruptcy? If Ch 13 will you be able to pay off in 60 months? Have you made a strategic default on real estate – if you have you are likely to be denied. Have you made good faith efforts to resolve debts? (Repayment agreements; lifestyle expenditures; have written evidence of everything.) While bankruptcy is not the preferred method of debt resolution it is a valid tool in resolving financial debts. There are lots of variables. Too many to provide specific answers here. You may want to seek assistance.
I have been just hired to work at the federal government but they will have to do a background check – I have filed for bankruptcy 4 years ago due to loss of income and I have settled one account that went to collection in February will this prevent me from getting a public trust clearance
Depends upon the bankruptcy details, number of delinquent accounts subsequent to the bankruptcy, was there a strategic default on a mortgage? Facts and circumstances.
I am still paying for the mortgage
I’m in the end stages of my 5 year review for my TS renewal. The investigator interviewed me already but had a credit report that was almost a year old and very outdated. She said they will pull another one (whether or not I get to verify those new financials with them is one question I have) but my concern is regarding some very old credit card charge offs. Some of them went to collections which were paid and reflect a $0 balance but a couple of them show a balance but note that it was “charged off”. I am working with an attorney to clean up my credit and have incorrect or outdated items removed (a few have already been removed) but I’m wondering how an adjudicator looks at charge offs. These accounts are due to fall off my credit soon so my attorney advised that I don’t pay them (so I don’t start the “clock” over on them) but will that reflect poorly on me when the adjudicator looks at it? I don’t want to hurt my credit by paying them when they’re about to fall off but at the same time I need to keep my clearance (and my job). It wasn’t paid years ago due to financial hardship from my fiancé having medical complications after a kidney transplant and all of his debt suddenly fell on my shoulders. I’ve asked my attorney for advice but he isn’t familiar with the security clearance side of things or anything to do with adjudications so he wasn’t able to help with my questions. I’ve researched this a lot and I am still confused what to do.
To clarify, my “charge offs” are not in collections. They’re just listed as derogatory on my credit. Thx
If I have outstanding credit card debt on ONE credit card, but is current and always has been and I have a great credit score it won’t impede the process of a SCI will it? I have a TS now.
Outstanding debt or delinquent debt? A person may be eligible for a clearance even with delinquent debt if you can demonstrate you have made a good faith effort to resolve debt. A repayment agreement with that creditor usually will suffice, but again the total financial picture comes into play.
Charge offs usually mean they weren’t paid. That might be a problem. Unforeseen medical expenses is a mitigating factor but inaction on clearing up past delinquencies could be a block. Again it depends upon the facts and circumstances
I filed late in 2014 and 2015 because of tangs we had going on in our lives (death of my mother, etc). We filed the taxes and have payment agreements that we ate keeping up with. Additionally, we plan to pull some money from our 401K to pay the balances down to zero. I know they really take late filing seriously. Should I be worried?
For a 5 year renewal of a TS Security Clearance, will my spouse’s credit be pulled?
I am preparing to fill out my e-quip. Pulled my credit reports and found several 30 day late pay but nothing deliquent. I pay all my bills on time. Got divorced in 2013 and began rebuilding my life which took a few years. I have one $200 collection that was paid about a month after it went into collections. I am super worried that my TS will not be renewed.
My clearance application was sent in on 5/1. Received LOI 5/10. Completed security package with attached LOI was submitted 6/15. I have about 23k in student loans that are currently in delinquent status, however working with debt collector to reconcile and get it back into good standing. I have a few loans, medical bills, and 3-4 small accounts that went into collections. I haven’t done anything to reconcile the debt with any of the lenders until the beginning of this year. I’ve recently made payments to pay off 1/3 of the debt and the rest payment arrangements were made. All documentation was provided to DHS for final review. No criminal history at all. What are my chances?
If one has about $63,000 in credit card debt and co-signed on an $18,000 Parent Plus Loan and barely able to make payments, would applying for another loan hurt my renewal for a DOD security clearance?
Recent hired govt employee completing an SF85. The IA officer noted that my clearance should be secret.
I have $47k credit card debt (4 with balance and 2 with no balance). Back in January I pulled my credit report and started fixing 2 derogatory remarks which were later removed in April this year. One was a closed credit card and no collections was made. The other was paid which was medical bill .on the sf 86 it asked if was ever over 120 days delinquent in the last 7 years. Should I disclose a medical bill that was in 2015 but is no longer on the credit report?
Note that I was unemployed for approximately 4 months from layoff. Prior to the layoff, I was on a debt plan to reduce my balances which pay more than the minimum. During the unemployment, I just made the minimum payment so it will not be delinquent. Had to adjust with little income coming in. My fico credit score is on the rise as my debt balance decreases. Ranges from 650 to 700s depending which I check the score from. The credit card debt was due to frivolous spending and had nothing to do with gambling. My mindset has changed and rarely make charges.
There was is also a questionnaire about paying foreign contacts. I rent a room for a $525/month from my aunt who is a permanent US resident. How would i further explain that the money is used for rent?
How does this look? Or provide me some guidance.
Was deployed and my wife ran up credit card debt while I was gone. After I got back, as a result of that, we keep all our finances separate. Well no surprise, she let her debt get out of control again and cannot repay her debts. I am still paying off the “joint” debt and cannot help. So, she is going to let everything go into collection. Since we have separate accounts and I had no knowledge of her financial situation, nor am I going to help, is my clearance at risk?
I have multiple charge offs and I have no set up plans to resolve. I have been asked by the investigator for proof of balances or payment plans. I need to provide a response in 10 working days. If I am unable to provide payment plans and only balances, which really means providing info on new collection company, will that severely affect my clearance approval as I am already in the new job?
I am in Ch. 13 bankruptcy, did get a Secret clearance, but my contract ended due to funding. I have a new offer that requires a clearance, but I am late on one CH13 payment (paid) and will not be able to make any more until I start getting paid in the new position.
Will this cause my clearance to be revoked and then I lose the new position as well?
I am in the state of Virginia. My wife is not on our mortgage but she is on the deed. If a lien is placed on the house, can it affect her clearance? She’s not responsible for making payments.
Not sure if this thread is still active, but I will ask my question anyway. I got myself into a lot of credit card debt after my divorce. I was fine with payments but used a debt relief program which caused many of my cards to go seriously delinquent or into collections while the debt relief company negotiated settlements with my creditors. All of the creditors have settlements in place and I am making regular payments to the debt relief company. If completely honest about my issues on the SF-86 and in any interview, what are the chances of obtaining TS/SCI, which I held before?