ISCR Case 19-01567

Case Headnote

ISCR Case No. 19-01567

deniedJan 30, 2020· Hon. LeRoy F. Foreman· hearing

Summary

A 43-year-old defense contractor and former U.S. Army sergeant was denied a security clearance due to significant financial concerns under Guideline F. The applicant had a history of multiple bankruptcies and delinquent debts totaling approximately $30,000.

Specifically, the applicant filed four bankruptcy petitions between April 2014 and January 2017, with each subsequent filing being dismissed due to issues such as failure to make payments, proposed plans extending beyond 60 months, and concerns about good faith regarding vehicle payments. Beyond the bankruptcies, the applicant had several outstanding debts, including an auto loan charged off for $16,706, which was later settled for less than the full balance, and another auto loan charged off for $4,992, which the applicant claimed was current. Other unresolved debts included a line of credit for $1,522, an installment sales contract for furniture for $1,204, and credit-union debts totaling $428 each. A cellphone account for $3,683 was also in collection, which the applicant disputed.

Despite admitting some allegations, the judge found that the applicant failed to mitigate the financial issues, emphasizing a pattern of financial irresponsibility and a lack of timely debt resolution. The applicant's inability to demonstrate responsible actions to resolve his financial issues after his last bankruptcy dismissal ultimately led to the denial of his security clearance.

Why the Applicant Was Denied

The applicant had a history of multiple bankruptcies and delinquent debts.
The applicant failed to demonstrate responsible actions to resolve his financial issues after his last bankruptcy was dismissed.
The applicant's financial irresponsibility raised concerns about his reliability and trustworthiness.

Conditions Referenced

Disqualifying

AG ¶ 19(a)appliedInability to Satisfy Debts
AG ¶ 19(b)appliedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
AG ¶ 19(c)appliedA History of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(a)rejectedBehavior Happened Long Ago or InfrequentlyThe applicant's delinquent debts are numerous and recent.
AG ¶ 20(b)rejectedConditions Largely Beyond the Person's ControlThe applicant did not act responsibly despite some circumstances being beyond his control.
AG ¶ 20(c)notedReceived Financial Counseling
AG ¶ 20(d)rejectedGood-faith Effort to Repay DebtsThe applicant did not provide evidence of significant actions to resolve debts.
AG ¶ 20(e)appliedReasonable Basis to Dispute DebtsThe applicant successfully disputed some debts.

Key Rule Quoted

“Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines.”
— Exec. Or. 10865 § 2.

Procedural Posture

SOR issuedJul 17, 2019
Answer filedAug 16, 2019
Hearing held—Decision made on the written record.
Decision dateJan 30, 2020

Cite For

Denial Based on Financial Irresponsibility Under Guideline F
Impact of Multiple Bankruptcies on Security Clearance Eligibility
Failure to Mitigate Financial Concerns Despite Some Evidence of Dispute Resolution

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	Applicant filed a bankruptcy petition on April 1, 2014, while he was on active duty. He owned and occupied a home near his military duty station. He was reassigned to another duty station and decided to rent his home. When his tenants stopped paying their rent, Applicant was unable to pay the mortgage loan on the home as well as his rent at the new duty station. He stopped making payments on the m	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.b	Applicant filed another bankruptcy petition on July 3, 2014. The bankruptcy was dismissed on motion of the trustee. The trustee objected to the plan on multiple grounds, including that the plan as proposed would extend beyond 60 months; that Applicant had failed to maintain the required payments; and that the plan proposed to pay $29,068 for two automobiles, indicating a lack of good faith.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.c	Applicant filed another Chapter 13 bankruptcy petition in September 2016, when he was on terminal leave before retiring from active duty in November 2016. It was dismissed in December 2016 on motion of the trustee for several defects in the proposed payment plan and for failure to make the payments.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.d	Applicant filed another Chapter 13 bankruptcy petition in January 2017, which was dismissed in April 2017. The trustee’s motion to dismiss cited Applicant’s failure to make payments, pointed out that the plan failed to provide for Applicant’s monthly $400 child-support obligation, and pointed out that the plan proposed to pay $38,617 for four automobiles, indicating a lack of good faith.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.e	Auto loan charged off for $16,706. This debt arose when Applicant co-signed a loan for his daughter. It was charged off in January 2019 and was settled in June 2019 for less than the full balance. $16,706	For Applicant	Auto Loan Debt	Denied	—	(d) good-faith effort to repay or otherwise resolve debts	—
1.f	Auto loan charged off for $4,992. In Applicant’s answer to the SOR, he asserted that he had been making monthly payments since 2017 on this debt and that the account was current. The credit report from March 2019 reflects that the debt was charged off for $10,554 in January 2017, that the debt was disputed, and that a reinvestigation was in process. $4,992	For Applicant	Auto Loan Debt	Denied	—	(e) reasonable, documented basis to dispute the debt	—
1.g	Line of credit charged off for $1,522. This debt was included in the July 2014 and January 2017 bankruptcies. In Applicant’s answer to the SOR, he asserted that a law firm was assisting him in resolving the debt. It is not resolved. $1,522	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.h	Installment sales contract for furniture, placed for collection of $1,204. Applicant stopped making payments on this debt in August 2016, and it was included in the January 2017 bankruptcy. The September 2019 credit report reflects that the debt is charged off. In Applicant’s answer to the SOR, he asserted that a law firm was assisting him in resolving this debt. It is not resolved. $1,204	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.i	Credit-union debt, placed for collection of $428. This debt was included in the January 2017 bankruptcy. The September 2019 credit report reflects that the debt is unpaid. In Applicant’s answer to the SOR, he asserted that a law firm was assisting him in resolving this debt. It is not resolved. $428	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.j	Military credit-card account past due for $106. The September 2019 credit report reflects that this account is current. $106	For Applicant	Credit Card Debt	Denied	—	(d) good-faith effort to repay or otherwise resolve debts	—
1.k	Cellphone account placed for collection of $3,683. In Applicant’s answer to the SOR, he stated that his monthly service bill with his cellphone provider was current, but that this debt is for six cellphones that the provider refused to take back. This account was referred for collection after Applicant’s last bankruptcy was filed and dismissed. The March 2019 credit report reflects that this debt is disputed. $3,683	For Applicant	Utility or Phone Debt	Denied	—	(e) reasonable, documented basis to dispute the debt	—
1.l	Credit-union debt, placed for collection of $428. This debt appears to be a duplicate of the debt alleged in SOR ¶ 1.i.	For Applicant	Unspecified Financial	Unknown	—	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

Applicant filed a bankruptcy petition on April 1, 2014, while he was on active duty. He owned and occupied a home near his military duty station. He was reassigned to another duty station and decided to rent his home. When his tenants stopped paying their rent, Applicant was unable to pay the mortgage loan on the home as well as his rent at the new duty station. He stopped making payments on the m

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

1.b

Applicant filed another bankruptcy petition on July 3, 2014. The bankruptcy was dismissed on motion of the trustee. The trustee objected to the plan on multiple grounds, including that the plan as proposed would extend beyond 60 months; that Applicant had failed to maintain the required payments; and that the plan proposed to pay $29,068 for two automobiles, indicating a lack of good faith.

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

1.c

Applicant filed another Chapter 13 bankruptcy petition in September 2016, when he was on terminal leave before retiring from active duty in November 2016. It was dismissed in December 2016 on motion of the trustee for several defects in the proposed payment plan and for failure to make the payments.

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

1.d

Applicant filed another Chapter 13 bankruptcy petition in January 2017, which was dismissed in April 2017. The trustee’s motion to dismiss cited Applicant’s failure to make payments, pointed out that the plan failed to provide for Applicant’s monthly $400 child-support obligation, and pointed out that the plan proposed to pay $38,617 for four automobiles, indicating a lack of good faith.

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

1.e

Auto loan charged off for $16,706. This debt arose when Applicant co-signed a loan for his daughter. It was charged off in January 2019 and was settled in June 2019 for less than the full balance.

$16,706

For Applicant

Auto Loan Debt

Denied

—

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

—

1.f

Auto loan charged off for $4,992. In Applicant’s answer to the SOR, he asserted that he had been making monthly payments since 2017 on this debt and that the account was current. The credit report from March 2019 reflects that the debt was charged off for $10,554 in January 2017, that the debt was disputed, and that a reinvestigation was in process.

$4,992

For Applicant

Auto Loan Debt

Denied

—

(e) reasonable, documented basis to dispute the debt

—

1.g

Line of credit charged off for $1,522. This debt was included in the July 2014 and January 2017 bankruptcies. In Applicant’s answer to the SOR, he asserted that a law firm was assisting him in resolving the debt. It is not resolved.

$1,522

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

1.h

Installment sales contract for furniture, placed for collection of $1,204. Applicant stopped making payments on this debt in August 2016, and it was included in the January 2017 bankruptcy. The September 2019 credit report reflects that the debt is charged off. In Applicant’s answer to the SOR, he asserted that a law firm was assisting him in resolving this debt. It is not resolved.

$1,204

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

1.i

Credit-union debt, placed for collection of $428. This debt was included in the January 2017 bankruptcy. The September 2019 credit report reflects that the debt is unpaid. In Applicant’s answer to the SOR, he asserted that a law firm was assisting him in resolving this debt. It is not resolved.

$428

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

1.j

Military credit-card account past due for $106. The September 2019 credit report reflects that this account is current.

$106

For Applicant

Credit Card Debt

Denied

—

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

—

1.k

Cellphone account placed for collection of $3,683. In Applicant’s answer to the SOR, he stated that his monthly service bill with his cellphone provider was current, but that this debt is for six cellphones that the provider refused to take back. This account was referred for collection after Applicant’s last bankruptcy was filed and dismissed. The March 2019 credit report reflects that this debt is disputed.

$3,683

For Applicant

Utility or Phone Debt

Denied

—

(e) reasonable, documented basis to dispute the debt

—

1.l

Credit-union debt, placed for collection of $428. This debt appears to be a duplicate of the debt alleged in SOR ¶ 1.i.

For Applicant

Unspecified Financial

Unknown

—

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Case Profile

Summary

Why the Applicant Was Denied

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

POLICIES

ANALYSIS

WHOLE PERSON CONCEPT

FORMAL FINDINGS

CONCLUSION