ISCR Case 18-00194

Case Headnote

ISCR Case No. 18-00194

grantedAug 29, 2019· Hon. Michael H. Leonard· hearing

Summary

A 52-year-old defense industry consultant was granted a security clearance despite a history of financial issues under Guideline F (Financial Considerations). The Statement of Reasons (SOR) alleged, and the applicant admitted, a history of financial problems, including a past-due mortgage loan of $3,890 with a total balance of $948,215, and five charged-off accounts totaling approximately $64,433. These charged-off accounts included three credit cards and two unsecured loans from peer-to-peer lending companies.

Specific resolutions for these debts were noted. A $23,957 charged-off credit card was settled in 2017 for $13,954, leading to the dismissal of a collection lawsuit in early 2018. Another $17,051 charged-off credit card was settled in 2017 for $14,675 through monthly payments concluding in October 2018. A $13,323 unsecured loan was settled in 2018 for $4,000, and an $8,866 unsecured loan was resolved with $100 monthly payments starting in October 2017. Additionally, a $1,236 charged-off credit card was settled in November 2017 for $1,512, also resulting in the dismissal of a collection lawsuit in early 2018.

The judge found that the applicant's financial difficulties were largely due to circumstances beyond his control, specifically his wife's mental health and a business downturn. The applicant demonstrated a good-faith effort to repay his delinquent debts, initiated and adhered to repayment arrangements, and took responsible actions to manage his finances. Consequently, the judge determined that the applicant was eligible for access to classified information.

Why the Applicant Prevailed

The applicant's financial problems were largely due to circumstances beyond his control.
He initiated and adhered to a good-faith effort to repay his delinquent debts.
The applicant took responsible actions to manage his finances and mitigate his financial issues.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(b)appliedConditions Beyond ControlThe financial problems were largely due to his wife's mental health and a business downturn.
AG ¶ 20(d)appliedGood-faith Effort to Repay DebtsThe applicant demonstrated significant efforts to resolve his debts.

Key Rule Quoted

“A security clearance case is not a debt-collection procedure. It is a procedure designed to evaluate an applicant’s judgment, reliability, and trustworthiness.”
— ISCR Case No. 09-02160 (App. Bd. Jun. 21, 2010)

Procedural Posture

SOR issuedMar 22, 2018
Answer filedApr 30, 2018Admitted in part and denied in part.
Hearing heldDec 4, 2018
Decision dateAug 29, 2019

Cite For

Mitigation of Financial Issues Under Guideline F
Good-faith Efforts to Repay Debts as a Mitigating Factor
Impact of Personal Circumstances on Financial Responsibility

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	The SOR alleged and Applicant admitted a history of financial problems.	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.b	the six delinquent financial accounts in the SOR are established by the documentary evidence.	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.c	the SOR concerns a past-due mortgage loan in the amount of $3,890 with a total balance of $948,215, and five charged-off accounts in the total amount of about $64,433. $3,890	For Applicant	Mortgage or Home Loan Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.d	Three of the charged-off accounts are credit card accounts, and two charged-off accounts are unsecured loans from peer-to-peer lending companies.	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.w	The $23,957 charged-off credit card account was settled in 2017, when Applicant agreed to make two payments totaling $13,954, and a pending collection lawsuit against Applicant was dismissed with prejudice in early 2018. $23,957	For Applicant	Credit Card Debt	Unknown	—	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.x	The $17,051 charged-off credit card account was settled in 2017, when Applicant agreed to make 12 monthly payments of $1,222 ending in October 2018 for a full settlement amount of $14,675. $17,051	For Applicant	Credit Card Debt	Unknown	—	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.y	The $13,323 charged-off unsecured loan was settled in 2018, when Applicant agreed to make three payments for a total of $4,000 ending in May 2018. $13,323	For Applicant	Unspecified Financial	Unknown	—	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.z	The $8,866 charged-off unsecured loan was resolved by a repayment arrangement calling for $100 monthly payments beginning in October 2017. $8,866	For Applicant	Unspecified Financial	Unknown	—	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.ab	The $1,236 charged-off credit card account was settled in November 2017 for a lump-sum payment of $1,512, and a pending collection lawsuit against Applicant was dismissed with prejudice in early 2018. $1,236	For Applicant	Credit Card Debt	Unknown	—	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

The SOR alleged and Applicant admitted a history of financial problems.

For Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

—

1.b

the six delinquent financial accounts in the SOR are established by the documentary evidence.

For Applicant

Unspecified Financial

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

—

1.c

the SOR concerns a past-due mortgage loan in the amount of $3,890 with a total balance of $948,215, and five charged-off accounts in the total amount of about $64,433.

$3,890

For Applicant

Mortgage or Home Loan Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

—

1.d

Three of the charged-off accounts are credit card accounts, and two charged-off accounts are unsecured loans from peer-to-peer lending companies.

For Applicant

Unspecified Financial

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

—

1.w

The $23,957 charged-off credit card account was settled in 2017, when Applicant agreed to make two payments totaling $13,954, and a pending collection lawsuit against Applicant was dismissed with prejudice in early 2018.

$23,957

For Applicant

Credit Card Debt

Unknown

—

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

—

1.x

The $17,051 charged-off credit card account was settled in 2017, when Applicant agreed to make 12 monthly payments of $1,222 ending in October 2018 for a full settlement amount of $14,675.

$17,051

For Applicant

Credit Card Debt

Unknown

—

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

—

1.y

The $13,323 charged-off unsecured loan was settled in 2018, when Applicant agreed to make three payments for a total of $4,000 ending in May 2018.

$13,323

For Applicant

Unspecified Financial

Unknown

—

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

—

1.z

The $8,866 charged-off unsecured loan was resolved by a repayment arrangement calling for $100 monthly payments beginning in October 2017.

$8,866

For Applicant

Unspecified Financial

Unknown

—

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

—

1.ab

The $1,236 charged-off credit card account was settled in November 2017 for a lump-sum payment of $1,512, and a pending collection lawsuit against Applicant was dismissed with prejudice in early 2018.

$1,236

For Applicant

Credit Card Debt

Unknown

—

(b) conditions largely beyond the person’s control; acted responsibly

(d) good-faith effort to repay or otherwise resolve debts

—

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Case Profile

Summary

Why the Applicant Prevailed

Conditions Referenced

Key Rule Quoted

Procedural Posture

Cite For

Full decision

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

APPEARANCES

STATEMENT OF CASE

FINDINGS OF FACT

DISCUSSION

FORMAL FINDINGS

CONCLUSION