Fort Gordon field guide
Will bankruptcy cost you your security clearance?
A straight answer for soldiers, DoD civilians and cleared contractors at Fort Gordon, formerly Fort Eisenhower, from a bankruptcy attorney who has practiced in Augusta since 1995.
By Angela McElroy-Magruder
Board Certified in Consumer Bankruptcy Law by the American Board of Certification
Bankruptcy is not on the disqualifying list
The word does not appear once in Guideline F. What gets weighed is vulnerability, honesty, and what you did about it.
You probably already have to report
SEAD 3 makes debt over 120 days delinquent reportable on its own, before bankruptcy is ever on the table.
Walk in with paper
A case number, a counseling certificate and a payment history give your security office facts instead of promises.
Need a straight answer now?
Call the Augusta office, or text if that is easier. The consultation is free and it stays between us.The direct answer
Filing bankruptcy does not automatically cost you your clearance.
The word "bankruptcy" does not appear anywhere in the list of things that disqualify you. What the government actually looks at is whether you are financially overextended in a way that makes you vulnerable, whether you have been honest about it, and whether you are doing something to fix it. Bankruptcy is one of the ways you show that you are.
Now let me tell you the part nobody at the office is going to explain to you.
Reporting duty
You probably already have to report.
Here is what most people get backwards.
If you hold a clearance, you are required to report to your security office when you are more than 120 days delinquent on any debt. Not when you file. When you fall behind. That rule lives in a directive called SEAD 3, it covers military members, government civilians and contractors alike, and it lists bankruptcy and wage garnishment as reportable right alongside the delinquency.
Read that again, because it changes the whole question.
You are going to that conversation either way. The only choice you have is whether you show up saying "I am months behind and I don't know what I'm going to do," or "I filed on the 14th, here's my case number, here's my payment plan, here's my counseling certificate."
Don't let anybody tell you those two conversations land the same way with an adjudicator.
Guideline F
What the government is actually worried about.
The rules that govern clearance decisions are the National Security Adjudicative Guidelines, issued in a directive called SEAD 4. Financial issues fall under Guideline F. The concern written into it is not that you owe money. It is that somebody who is drowning financially might do something desperate to get out from under it. That is the entire theory, and once you see it, most of the rest of this makes sense.
So when an adjudicator opens your file, they are not adding up what you owe and checking it against a limit. There is no limit. There never was one. I get asked constantly whether $30,000 is too much, or whether $75,000 is too much, and the honest answer is that the number is not the thing they are looking at. They are looking at how you got there, whether you have been straight about it, and what you have done since.
The actual list
Nobody shows you the conditions, so here they are.
Every page you will read on this subject tells you there is a list and then does not show it to you. This is the current text, from the directive itself. Read 19(a) and 19(b) first, because that is where the whole misunderstanding starts.
SEAD 4, Guideline F
Financial considerations
Paragraph 18 sets the concern: failure to live within one's means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules, all of which can raise questions about an individual's reliability and trustworthiness.
- inability to satisfy debts;
- unwillingness to satisfy debts regardless of the ability to do so;
- a history of not meeting financial obligations;
- deceptive or illegal financial practices such as embezzlement, employee theft, check fraud, expense account fraud, mortgage fraud, filing deceptive loan statements and other intentional financial breaches of trust;
- consistent spending beyond one's means or frivolous or irresponsible spending, which may be indicated by excessive indebtedness, significant negative cash flow, a history of late payments or of non-payment, or other negative financial indicators;
- failure to file or fraudulently filing annual Federal, state, or local income tax returns or failure to pay annual Federal, state, or local income tax as required;
- unexplained affluence, as shown by a lifestyle or standard of living, increase in net worth, or money transfers that are inconsistent with known legal sources of income;
- borrowing money or engaging in significant financial transactions to fund gambling or pay gambling debts;
- concealing gambling losses, family conflict, or other problems caused by gambling.
- the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur and does not cast doubt on the individual's current reliability, trustworthiness, or good judgment;
- the conditions that resulted in the financial problem were largely beyond the person's control (e.g., loss of employment, a business downturn, unexpected medical emergency, a death, divorce or separation, clear victimization by predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances;
- the individual has received or is receiving financial counseling for the problem from a legitimate and credible source, such as a non-profit credit counseling service, and there are clear indications that the problem is being resolved or is under control;
- the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts;
- the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue;
- the affluence resulted from a legal source of income;
- the individual has made arrangements with the appropriate tax authority to file or pay the amount owed and is in compliance with those arrangements.
Text from Security Executive Agent Directive 4, effective June 8, 2017. Be careful with older versions: 32 CFR 147.8 still ranks well in search and it is the pre-2017 text, with only five disqualifying conditions. It no longer controls.
Sixteen conditions, and bankruptcy is not one of them. Look at what 19(a) and 19(b) actually say: inability to satisfy debts, and unwillingness to satisfy debts. A bankruptcy case is neither one. It is a federal court process for resolving debts you cannot pay. That is the opposite of doing nothing about them.
Documented mitigation
Why filing usually helps.
Look at that mitigating column again. Two of those conditions describe a bankruptcy case almost word for word.
Condition 20(c)
A certificate with a date on it
20(c) credits you for financial counseling from a legitimate source, and it names nonprofit credit counseling specifically. You cannot file a bankruptcy case without completing a counseling course from an agency approved by the United States Trustee. You do not have to argue that you got counseling. You have the certificate.
Condition 20(d)
Good faith a court can verify
20(d) credits a good-faith effort to repay overdue creditors or otherwise resolve debts. A Chapter 13 case is a court-approved repayment plan that a federal trustee monitors for three to five years. If you want documentation of good faith, it is hard to do better than years of payments a court can confirm.
This is the part the anonymous advice online gets wrong. People will tell you bankruptcy is "frowned upon." What is frowned upon is sitting still.
Patterns to avoid
What actually sinks people.
In the published decisions, the same four things come up over and over.
Doing nothing
A $3,000 credit card that went to collections and then to judgment while you ignored it is worse for you than a $60,000 bankruptcy you handled. The guideline is aimed at inability and unwillingness. Filing is neither.
Lying on the SF-86
This is the one that ends careers, and I want you to hear it clearly. The form asks about bankruptcy directly, and it asks separately about delinquency, garnishment, foreclosure, repossession and defaults. People leave it off because they are embarrassed. Then the investigator finds it in ten minutes, because it is a public court record, and now the problem is not your money. It is your honesty. Financial trouble gets mitigated all the time. Lack of candor almost never does.
Filing over and over
Starting Chapter 13 cases and letting them get dismissed, usually to stall a foreclosure, reads as exactly the pattern the guideline is written to catch. It is the repetition that gets noticed, not the filing. If you are going to file a 13, file one you can actually finish.
Ignoring tax returns
Unfiled returns get treated harder than consumer debt, because it is not a hardship, it is a choice. 19(f) covers it directly. But look at 20(g): there is a mitigating condition just for getting on an arrangement with the tax authority and staying in compliance with it. I deal with tax debt in Chapter 13 constantly. If unfiled returns are part of your situation, tell me at the consultation and tell your security office.
Chapter choice
No, Chapter 13 is not automatically "better."
You will read on forums that Chapter 13 looks better than Chapter 7 because it shows you are paying something. There is something to that, and it is not the whole story.
Chapter 13 gives you years of verifiable payments, and that is real. But a Chapter 7 that you complete and discharge cleanly resolves the vulnerability outright, and it does it in a few months instead of five years. A Chapter 13 you cannot afford and end up abandoning leaves you worse off than the Chapter 7 you should have filed in the first place.
Reporting file
Who you tell, and what you bring.
Bring paper. Every time.
Print-ready checklist
Put these in a folder before you go
- The petition and your schedules
- The case number and which court
- Your trustee's name and contact information
- Your Chapter 13 confirmation order, if you are in a 13
- Your Chapter 13 payment history, if you are in a 13
- The credit counseling certificate
- The discharge order when it comes
- Anything documenting what caused this: the layoff notice, the hospital bills, the divorce decree, the deployment orders
Do not walk in and explain it from memory. Walk in with a folder.
Here in Augusta
Where your case actually goes.
Fort Gordon is home to the Army Cyber Center of Excellence and the headquarters of Army Cyber Command, which is a long way of saying this is a town full of people who hold clearances. Roughly 30,000 military members, government civilians and contractors work on the installation, about 16,000 of them service members. I have been practicing bankruptcy law a few miles away since 1995, so this is not a hypothetical conversation for me.
If you file, your case goes to the United States Bankruptcy Court for the Southern District of Georgia, Augusta Division, which sits at the Federal Justice Center on James Brown Boulevard downtown. Not to a court in Atlanta, and not to some national processing center. Your 341 meeting of creditors happens here. Your trustee is here. When your security office asks which court, that is the answer.
Questions people ask
The answers most websites skip.
These are the clearance questions. If you have the ordinary ones, how long it takes, what it costs, what you get to keep, those are answered on the firm's bankruptcy FAQ page.
How much debt is a red flag for a security clearance?
There is no dollar threshold. Guideline F does not contain one, and anybody who quotes you a number is making it up. I get asked whether $30,000 is too much, or $75,000. The number is not what an adjudicator is weighing. How you got there, whether you have been honest about it, and what you have done since are what they are weighing.
Can I lose my security clearance because of debt?
It happens, but not for the reason most people assume. The concern in the guideline is that heavy financial pressure can make a person vulnerable or push them into bad judgment. Debt you are visibly handling, with documentation behind it, is a completely different record from debt you have ignored for two years. The second one is what causes trouble.
Do I have to report a Chapter 7 or Chapter 13 filing to my security office?
Yes. SEAD 3 lists bankruptcy as a reportable financial event. It also lists debt more than 120 days delinquent and wage garnishment, which is the part people miss, because it means most people asking this question were already required to report before they ever thought about filing. Do not treat filing as the thing that triggers the conversation.
Can you get a security clearance after filing Chapter 7?
Yes. Bankruptcy is not on the list of disqualifying conditions. A Chapter 7 you complete and discharge resolves the underlying financial problem, which is the thing being evaluated. Disclose it on the SF-86, bring your paperwork, and be ready to explain what put you there.
Will my command find out?
Your security office will know, because you are going to tell them. How far it travels from there depends on your command and your situation, and I am not going to promise you it stays in one room.
Can I be fired for filing bankruptcy?
Federal law splits this in two, and the split matters here because so many people at Gordon work for contractors rather than the government.
If you work for the government, 11 U.S.C. § 525(a) says a government employer cannot refuse to hire you, terminate you, or discriminate against you in employment because you filed bankruptcy. If you work for a private contractor, § 525(b) protects the job you already have from termination and discrimination, but its text does not cover refusing to hire, and courts have generally read it that way.
Then there is a third thing, separate from both. A decision about your access to classified information is not an employment decision. If your access gets suspended and your job requires access, that is a problem your bankruptcy case does not solve, and you need somebody who handles clearance work.
Will bankruptcy delay an interim clearance?
It can. Financial issues are one of the things that put a file into further review instead of straight through. Complete disclosure and organized records are what shorten that review.
Does my spouse's bankruptcy affect me?
It can come up, particularly on joint debts. Bring it up yourself rather than waiting to be asked about it.
What if the debt came from gambling?
Tell me at the consultation. Gambling is treated differently under the guideline than a medical crisis is, and concealing gambling losses is its own separate condition, 19(i). I would rather know going in.
Professional scope
What I can and cannot do for you.
I am a bankruptcy attorney. I am board certified in consumer bankruptcy law and I have been practicing in Augusta since 1995. I am not a security clearance lawyer, and I am not going to pretend to be one.
Here is what that means for you. I can file your case, pick the right chapter for your income, and give you clean documentation for every step of it, which is most of what your security office is going to want to see anyway. If you are facing a Statement of Reasons or an actual revocation, you need a clearance attorney, and I will tell you that on the first call instead of taking your money for work I do not do.
Most people who come to me are not there yet. They are behind, they are scared, and somebody in their unit told them that filing will end their career. That is the conversation I can help with.
If you are at that point
Get your answer before a garnishment hits your pay.
Call the office and come talk to me, or send a message through the contact page. The consultation is free, it stays between us, and you will leave knowing where you stand instead of guessing.
About the author
Angela McElroy-Magruder
Angie has practiced bankruptcy and consumer law in Augusta since 1995. She has been Board Certified in Consumer Bankruptcy Law by the American Board of Certification since 2007, and her cases have produced published decisions cited by courts around the country.
Primary sources: SEAD 3, reporting requirements; SEAD 4, national adjudicative guidelines; U.S. Trustee Program, approved credit counseling agencies; 11 U.S.C. § 525; U.S. Bankruptcy Court, Southern District of Georgia, court locations.
Fort Gordon: the Army dedicated Fort Gordon in 2025 to Master Sgt. Gary I. Gordon, a Medal of Honor recipient killed in the 1993 Battle of Mogadishu. The installation is home to the Army Cyber Center of Excellence and the headquarters of Army Cyber Command.
This page provides general information, not legal advice for a particular bankruptcy case or security clearance matter. Reading it does not create an attorney-client relationship. Security clearance decisions depend on the full record and on the responsible agency.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.