How will a Foreclosure Affect my Security Clearance?

If you are employed by the federal government, either as a member of the military or as a civilian working as a contractor, you may hold or need to apply for federal security clearance. Those federal employees who work with classified information will need to hold a security clearance that will be classified as either confidential, secret or top secret.

When you are entrusted with classified government information, it is important that your employer knows that you can be trusted to act responsibly. Your background will be carefully monitored before and periodically throughout the duration of your employment. If there is nothing in your history to suggest that you are a threat to national security and financial information, you should have no problems with your security clearance.

Beyond needing to know that you demonstrate solid judgement skills that suggest you can keep classified information safe, the government will also look at your personal finances when it comes to granting a security clearance.

If you have a long, sordid history of not paying bills on time, falling behind on loans, and large piles of debt, the government will naturally wonder if you have the appropriate self-control required to safeguard classified information and to turn down potential bribes.

Many federal employees who need a security clearance to keep their jobs have become very nervous during this past decade of mortgage uncertainty. As foreclosure rates have soared all over the country since 2007, more and more military employees and contractors have had their security clearances called into question.

It’s important to know that simply having a home in foreclosure does not automatically mean you will lose your security clearance. In fact, if your foreclosure was caused by factors that are mostly out of your control, you have a better chance of keeping your clearance. Things like:

  • Relocating for work (especially when you were required to do so)
  • Divorce
  • Short sale (with interested buyers) that was cancelled by your lender in favor of foreclosure

…can all be causes of foreclosure that are controlled by outside forces that go beyond your ability to handle your finances.

Your employer will also want to know that you have been making efforts to right your current financial situation. If your past financial history is pretty clear of big mistakes, and you are working to get your foreclosure settled (and pay off any remaining amounts due), you will more than likely be able to keep your security clearance.

It is crucial, however, that you take very deliberate steps to ensure that your lender is satisfied at the end of your foreclosure so that nothing can come back to haunt you when it comes time for your next security clearance review.

If you think a foreclosure is in your foreseeable future, keep your adjudicator apprised of the situation every step of the way so that they have all of the information you have. Work with an experienced NJ attorney who specializes in foreclosure and real estate matters to ensure that your security clearance will remain intact.

Image credit: Cafe Credit

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