Military, Debt and Job Loss

One of the sad realities of our economic situation today is that many people with good credit have found themselves in a frustrating and overwhelming cycle of debt. We often hear from our military service people that they are facing a reassignment or, even worse, release from the military due to serious credit problems. These can include having too much debt or owing on bills that are past due.

Typically a service person, or a civilian employed with the government, will receive a letter notifying them that they are facing the loss of their security clearance due to financial issues. That letter is the first opportunity a military member has to address their debt problem.

According to Ms. Wanda Rhea, a Department of the Navy Personnel Security Appeals Board Member, one of the most important steps someone in this situation can take is putting together a plan for getting on track. “Financial problems make up over 80% of the people we see facing a security clearance loss. It is critical that our sailors and military members address every financial issue they are having.”

Ms. Rhea also spoke directly about debt management plans and how they can help a service person keep their security clearance. “Having a debt management plan (DMP) is not enough. You need to include all of your debts on the DMP and if you don’t, you have to explain (to investigators) why.” Two other points Ms. Rhea mentioned about using a debt management plan to save your security clearance and career included:

  • Make sure you get a letter from the credit counseling agency administering your debt management plan that shows you are on the plan and how many payments you have made (if any yet).
  • Check your credit report to make sure you have a plan for repaying and bringing current, all of your debts.

If you receive a letter notifying you that the military intends to revoke your security clearance due to financial problems here a handful of helpful tips:

  1. Respond to the letter. Start getting your financial “ducks” in a row.
    • If you have paid a debt, get a copy of the cancelled check (front AND back).
    • Get a letter from the creditor that states the account is paid in full, was settled, or that it is now current.
    • If your credit report reflects that a debt was paid or settled, provide a copy of it in your response.
  2. Address every issue in the letter.
  3. Work with your Security Manager to identify mitigating factors for having debt issues. Those may include identity theft, out of the ordinary expenses, or divorce.
  4. If the security clearance is revoked or suspended, work with your Security Manager to file an appeal.
  5. Seek out command endorsements.

Having financial difficulties is tough enough without having to worry about losing your job. If you are faced with this situation, remember that our military has invested time and money into you and they do not want to let you go.  According to Ms. Rhea who, as a member of the Board of Appeals, is one of the people responsible for approving or denying security appeals for the Navy, they are able to save 1/3 to 1/2 of the people facing security revocations. “Command involvement is one of the most critical factors in a successful appeal – that and proof.”

If you are having trouble paying your bills, falling behind in payments, or just feel overwhelmed by your debt, call a certified credit counselor today. Don’t let debt be the end of your career. Find out about your options, and about how a debt management plan may help you.