Military and Debt – Too Much Debt Can Ruin Your Military Career

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Military and debt don’t mix. Anyone who is serving in the military needs to be aware of how debt can negatively affect their military career. Most people by now should understand that the military will pull a credit report on anyone who is applying for a security clearance and that the security clearance can be…

Military and debt don’t mix. Anyone who is serving in the military needs to be aware of how debt can negatively affect their military career.

Most people by now should understand that the military will pull a credit report on anyone who is applying for a security clearance and that the security clearance can be denied if the person is carrying too high of a debt load.

If your MOS (job) depends on obtaining that clearance and it is denied, you could be involuntarily re-classed into a different job that doesn’t require a clearance… hope you like cooking if that is your situation!

What some people don’t know is that you can actually be discharged from the military for too much debt.

I saw it happen to a Desert Storm vet back when I was a private in 1999. Once the Commander got the letter of indebtedness, and it was determined the soldier couldn’t pay it, they proceeded to revoke his security clearance for it.

Since our MOS required a Secret level clearance, he had the choice of being involuntarily re-classed into a new career field or receive an Article 15 for displaying patterns of misconduct.

He could have also received an Administration Discharge if he continued to show the same patterns of misconduct. He chose separation over becoming a cook.


Years later, as a Sergeant, I had to write one of my soldiers up for being in debt that he couldn’t pay. I had to take him to a budgeting class since the bad debt was a repossessed car, and he ended up with extra duty and a repayment plan drafted up by our Commander.

Anyone who has ever served knows that the military pay is less than generous when compared to the civilian equivalent.

So it becomes imperative to operate your household on a budget in light of the negative consequences of debt!

Military and Debt Regulation: Article 134 of the Uniform Code of Military Justice (UCMJ)

Here is the excerpt of Article 134 of the Uniform Code of Military Justice (UCMJ). This is the same Article that the specialist was discharged under, and that I wrote up my soldier for:

Article 134 – (Debt, dishonorably failing to pay)


(1) That the accused was indebted to a certain person or entity in a certain sum;

(2) That this debt became due and payable on or about a certain date;

(3) That while the debt was still due and payable the accused dishonorably failed to pay this debt; and

(4) That, under the circumstances, the conduct of the accused was to the prejudice of good order and discipline in the armed forces or was of a nature to bring discredit upon the armed forces.

Explanation: More than negligence in nonpayment is necessary. The failure to pay must be characterized by deceit, evasion, false promises, or other distinctly culpable circumstances indicating a deliberate nonpayment or grossly indifferent attitude to-ward one’s just obligations.

For a debt to form the basis of this offense, the accused must not have had a defense, or an equivalent offset or counterclaim, either in fact or according to the accused’s belief, at the time alleged. The offense should not be charged if there was a genuine dispute between the parties as to the facts or law relating to the debt which would affect the obligation of the accused to pay.

The offense is not committed if the creditor or creditors involved are satisfied with the conduct of the debtor with respect to payment. The length of the period of nonpayment and any denial of indebtedness which the accused may have made may tend to prove that the accused’s conduct was dishonorable, but the court-martial may convict only if it finds from all of the evidence that the conduct was in fact dishonorable.

Lesser included offenses: None.

Maximum punishment: Bad-conduct discharge, forfeiture of all pay and allowances, and confinement for 6 months.

As you can see, excessive debt can have a severe impact on your career. It will also have a negative impact on your personal life. But debt is only part of the total picture when it comes to your security clearance and background check.

Your Security Clearance Background Check Looks at More than Just Debt

Your credit report is often included in your background check when you apply for a security clearance or apply for a new job. Why your credit report a consideration for a security clearance, or in a job search? Here are some reasons your amount of debt and your credit report can impact your background check:

Security Clearance Background Check

Your credit report is a sign if your trustworthiness. If you will be working with sensitive information, or if you are in a position where you are handling money, the government or another employer wants to know whether or not your poor financial situation would make you vulnerable to bribe attempts.

If you have a lot of debt, there is the concern that you would be willing to sell classified or proprietary information, or that you might embezzle funds that you are overseeing.

Reducing Behaviors to Numbers

Your credit report is often considered a direct reflection of the financial risk you represent to an employer, lender, or other entity. Every day, employers, insurers, lenders, cell phone providers, and others make decisions about who they think will be reliable based on information in your credit report. It’s not personal.

These organizations simply crunch the numbers and base their decisions on the law of averages. The way to get that in your favor is to increase your credit score.

Action Steps – How to Control Your Debt and Improve Your Credit Report

The amount of debt you have and your credit report aren’t necessarily directly related. But one can impact the other. When you are applying for a security clearance, your entire background will be reviewed, not just your financial risk.

How to get out of debt quickly:

  • Create a list of all your debts (credit cards, car loans, mortgages, student loans, medical bills, and anything else you may have).
  • Organize the information. List the minimum amount due on each payment, along with the interest rate.
  • Create a repayment schedule, starting by paying the minimum on all loans except the one with the highest interest rate. Note: Some people prefer to start with the loan with the lowest balance, to pay that off more quickly, so they can direct that payment toward the next lowest balance. This is called a debt snowball and is another excellent way to pay off debt quickly.
  • Repeat this process until you have paid off most, or all, or your loans.
  • You can find more detail in this guide to getting out of debt quickly.

How to manage your credit score:

  • Start with a copy of your credit report. Here is how to get a free copy of your credit report each year. Credit reports are critical to understanding what your credit score actually means.
  • Next, get copies of your credit scores. Credit reports and scores are different – the report is like a report card, with a list of all open accounts, and any negative actions. The score is a numerical representation of your report. Here is how to get a free credit score. Credit scores change regularly, and with a free credit tool, you can get regular updates any time your score changes, with feedback on your scores.
  • Correct any errors on your credit report. Identity theft is an unfortunate occurrence, one that can hit your credit score hard. Mistakes also happen with reporting, and if you don’t correct them, they’ll seriously hurt your score. Make sure your score is accurate and work to amend any errors you find ASAP.
  • Sign up for a credit monitoring service to track your progress. You don’t have to hound the credit bureaus every time you need more information. With a credit monitoring tool, you can get tips and updates. Two free options are Credit Karma and Credit Sesame.

Get Your Score from Credit Karma

How to repair your credit:

Pay all bills on time

Get up to date on all bills. Next, continue making all payments on time, every time. Finally, pay off your loans, and try not to take out new loans, rack up more debt, or open new accounts. All of those actions can have a negative impact on your credit score in the short term.

Pay off your overdue accounts

Every day your overdue accounts remain unpaid, your credit score is affected. Drill down on the past due accounts to improve your overall score.

Pick a budgeting method and stick to it

How you choose to budget isn’t as important as your willingness to stick with the plan. Track every single dollar and be sure to factor in your emergency fund, savings, essentials, and non-essential purchases. Having a plan in place will help you maintain your debt repayment strategy. And if there is ever any excess money, you can apply it to your credit repair goals as well.

Shop with credit cards

When used responsibly, a credit card can be one of the keys to unlocking financial freedom. With rewards, low interest, and debt-transfer options, credit cards can help you prove to the credit bureaus that you can utilize credit sensibly, which will have a major impact on your score.

Tweak your credit card use

There are some practical ways to boost your score with credit cards beyond simply making payments on time. Your credit score considers credit ratios as well as how many lines of credit you have open. With that in mind, you can boost your score by increasing the credit limit on a card or by opening more credit card accounts. Again, use these cards responsibly and make sure you can keep track of your spending with each one.

Hold on to your old cards

Closing out a credit card can lower your score. Again, bureaus want to see your credit card use over time. Even if you aren’t regularly using a card, you might want to keep it open to help your score. If you need to toss one of your cards, make it the most recent card to keep your score where you want it.

Use credit repair services

If you need a little help repaying your debts, there are a host of credit repair companies who will work to consolidate your debts and help you repair your credit score. A few popular companies to consider are:

Consider credit repair software

Much like a robo-advisor manages your investments, this type of software handles your credit repair online. You get the service of a credit repair company without ever leaving home. These services are an affordable tool to help you meet your credit goals.

Following these steps will put you in a better financial position, and also make it easier for you to be approved for a security clearance or other background check.

This is a guest post from Ana, the author of the blog Debt-Free Revolution. Ana is “an Army wife, an Iraq veteran, a college student, a mom, family CFO, and a “Pizza Delivery Expert” a.k.a. a Domino’s pizza delivery driver to get her family out of the chain of debt!”

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About Ryan Guina

Ryan Guina is the founder and editor of Cash Money Life. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is a current member of the IL Air National Guard.

Ryan started Cash Money Life in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about military money topics and military and veterans benefits at The Military Wallet.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free account here.

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  1. Ollie says

    Hello! I am in the process of getting in the Air Force. I had my credit pulled. I had no clue I had so much credit card debt – roughly $16k. Turns out my mother took out a few credit cards in my name and charged them up without my knowledge. Very few payments have been missed. I know I need a waiver and we plan on paying half of it down with income tax refund. Besides that my background is squeaky clean. There a couple of jobs that require Sercret that I am interested in but the majority of my top picks require TS. Do you think I will be ok?

    • Ryan Guina says

      Ollie, you need to have a serious discussion with your mother about what she has done to you and your finances.

      Now that you know about this, you have an obligation to take care of it – that means you can either assume the debt as your own and take responsibility for it, or you can work with your mother to have the debt transferred to her name. If you don’t have a good relationship with your mother, or she refuses to take responsibility, then you may have to resort to legal methods, such as filing a police report for stolen identity and contacting the credit card companies to inform them of the issue. (Filing a police report could have a serious legal impact on your mother, so be aware of this).

      I won’t presume to tell you how to handle this, as I don’t know your situation or your relationship with your mother. But I would assume that once you know about the charges on these credit cards, you are now responsible for them. That means you need to take action – either assuming the debt, or requesting your mother transfer the debts to her name.

      I also recommend freezing your credit to prevent your mother or anyone else from opening new accounts in your name. You can freeze your credit for free with each of the major credit bureaus. You will need to create a PIN to unfreeze your credit each time you need to open a credit account.

      Will this impact your ability to get a security clearance? I don’t know. $16,000 of debt sounds like a lot, but many people take out more than that to buy a car. So it’s not a major amount of debt. The bigger question is how that much debt fits in with your total financial picture. Can you reasonably afford to make the payments on those credit cards based on your income and other expenses? If so, then that amount of debt by itself likely isn’t too large to prevent you from being eligible for a security clearance.

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