Bankruptcy does not disqualify anyone from obtaining a security clearance. Jobs requiring security clearances ask applicants if they have filed for bankruptcy not as a disqualifier but to evaluate personal financial practices. Security personnel assess an applicant's judgment and trustworthiness and the circumstances around debt and bankruptcy may affect a security clearance, though not the bankruptcy itself.
Public positions and private jobs with government contractors require security clearances if the job involves classified material or access. Security personnel in government departments evaluate applications for security clearances. Personnel determine if an applicant is an acceptable security risk by evaluating personal affiliations and behavior. Financial considerations is one of the 13 categories taken into account.
ClearanceJobs.com states that reporting bankruptcy flags security personnel to investigate further, and the Department of State's Adjudicative Guidelines assure applicants that they will not be disqualified solely for bankruptcy. Personnel investigate the circumstances under which you filed for bankruptcy. Debts out of your control (unemployment, medical bills, divorce) and responsible reactions to those debts (which can include filing for bankruptcy) make you much less of a risk than debts from overconsumption or gambling resulting in bankruptcy.
Debts in Default
Security personnel also ask about debts in default and ClearanceJobs.com notes that over $3,500 in default is a red flag. In these cases, filing for bankruptcy may be seen as positive because you are taking steps to clear up your personal finances in an officially condoned manner. Furthermore, outstanding debts signals a security risk for bribery and corruption; ClearanceJobs.com reports that "most Americans who betrayed their country" did so for financial gain, and half of those due to a need for money.
When investigating your bankruptcy, security personnel take many things into account. Recent bankruptcy is more worrisome than bankruptcy two years ago or more, and your age at the time of bankruptcy also matters. Financial practices since the bankruptcy play an important role; recent responsibility is key. The United States Air Force Academy Legal Office states that security personnel also weigh interviews with your co-workers heavily.