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ISCR Case 20-01316 — CASE

ISCR Case 20-01316granted

Case Headnote

ISCR Case No. 20-01316

grantedNov 10, 2021· Hon. Edward W. Loughran· hearing

Summary

This security clearance decision involved an applicant facing concerns under Guideline F (Financial Considerations) due to past financial difficulties. The Statement of Reasons (SOR) alleged a past-due auto loan, twelve delinquent debts totaling approximately $21,100, and defaulted first and second mortgage loans. These issues stemmed from a divorce and medical expenses.

The applicant, represented by counsel, took significant steps to resolve these financial problems. She paid, settled, or otherwise resolved ten of the twelve SOR debts and contacted creditors for the remaining two debts, totaling $829 and $603, to discuss payment or settlement. Regarding the defaulted mortgages, the applicant and her ex-husband purchased a house in 2005. She negotiated a short sale, resulting in the first mortgage creditor forgiving an $88,733 deficiency via an IRS Form 1099-C. She also negotiated a settlement of approximately $31,000 with the second mortgage creditor.

The judge found that the applicant had established and implemented a plan to resolve her financial issues, including paying or settling five debts totaling about $25,000 before the SOR was issued. Ultimately, the judge concluded that her financial problems did not affect her reliability or trustworthiness, and her security clearance was GRANTED.

Why the Applicant Prevailed

The applicant established a plan to resolve her financial problems and took significant action to implement that plan.
She paid or settled five debts totaling about $25,000 before the SOR was issued.
The judge found that the applicant's financial issues did not create doubt about her reliability or trustworthiness.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedFinancial Considerations - Inability or Unwillingness to Satisfy Debts
AG ¶ 19(c)raisedFinancial Considerations - A History of Not Meeting Financial Obligations

Mitigating

AG ¶ 20(a)appliedFinancial Considerations - the Behavior Was Not Recent
AG ¶ 20(b)appliedFinancial Considerations - the Conditions That Resulted in the Financial Problems Were Largely Beyond the Person's Control
AG ¶ 20(d)appliedFinancial Considerations - the Individual Has Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts

Key Rule Quoted

“I also gave due consideration to the whole-person concept.”

Procedural Posture

SOR issuedSep 22, 2020
Answer filed—
Hearing heldOct 25, 2021
Decision dateNov 10, 2021

Cite For

Mitigation of Financial Issues Under Guideline F
Significant Action Taken to Resolve Debts
Whole-person Concept in Security Clearance Determinations

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

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: HearingDecided: granted

The judge found that the applicant had significant financial issues, including a past-due auto loan and multiple delinquent debts totaling approximately $21,100. However, the applicant took substantial steps to resolve these debts, leading to a decision in her favor regarding her security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	The SOR alleges a past-due auto loan; 12 delinquent debts totaling about $21,100; and defaulted first and second mortgage loans. $21,100	For Applicant	Auto Loan Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.b	She paid, settled, or otherwise resolved 10 of the 12 SOR debts.	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.c	She contacted the creditors for two of the debts ($829 and $603) about paying or settling the debts.	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.d	Applicant and her ex-husband bought a house in 2005 at the height of the housing bubble.	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.e	Applicant negotiated for a short sale of the house.	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.f	The creditors for the first mortgage loan issued an IRS Form 1099-C (Cancellation of Debt) forgiving the deficiency of $88,733.	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—
1.g	Applicant negotiated with the creditor holding the second mortgage loan to settle the debt for about $31,000. $31,000	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur (b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	—

Descriptive standardized rendering of a decided public case (Guideline F). The verbatim source decision is shown in full below.

Full decision

The complete, official text — footnotes and signatures included — is in the original PDF.

Decision text, by section

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

______________ ______________ DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: ) ) ) ISCR Case No. 20-01316 ) Applicant for Security Clearance ) Appearances For Government: Rhett E. Petcher, Esq., Department Counsel For Applicant: Leon J. Schachter, Esq. 11/10/2021 Decision LOUGHRAN, Edward W., Administrative Judge: On September 22, 2020, the Department of Defense (DOD) issued a Statement of Reasons (SOR) to Applicant detailing security concerns under Guideline F, financial considerations.1 Applicant responded to the SOR and requested a hearing before an administrative judge. The case was assigned to another administrative judge on September 1, 2021, and reassigned to me on September 22, 2021. The hearing was held as scheduled on October 25, 2021. On November 8, 2021, I proposed to the parties that this case was appropriate for a summary disposition in Applicant’s favor. Department Counsel did not object. Applicant’s financial problems were caused by her divorce, her ex-husband’s failure to pay his share of the marital debt, and her child’s cancer treatment. She started addressing her problems in 2016. She paid or settled five debts not alleged in the SOR, totaling about $25,000, well before the SOR was issued. 1 This case is adjudicated under Executive Order (EO) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines, which became effective on June 8, 2017.

________________________ The SOR alleges a past-due auto loan; 12 delinquent debts totaling about $21,100; and defaulted first and second mortgage loans. The auto loan is now current. She paid, settled, or otherwise resolved 10 of the 12 SOR debts. She contacted the creditors for two of the debts ($829 and $603) about paying or settling the debts. She was told that the debts had been charged off, and the creditors were no longer collecting the debts. Applicant and her ex-husband bought a house in 2005 at the height of the housing bubble. The purchase was financed with first (80%) and second (20%) mortgage loans. The housing market collapsed, and the house was worth much less than what they paid for it. Applicant’s divorce decree stated that Applicant would live in the house and pay the mortgage loans until their child turned 18 in 2018, at which time the house would be sold, and they would split the profits or losses. Applicant negotiated for a short sale of the house. The house was under contract for about six months, when mold was discovered in the hot, empty house after a home inspector turned the air conditioning off in the house. The sale was cancelled, and the house was lost to foreclosure. The creditors for the first mortgage loan issued an IRS Form 1099-C (Cancellation of Debt) forgiving the deficiency of $88,733. Applicant negotiated with the creditor holding the second mortgage loan to settle the debt for about $31,000. The creditor wants the settlement to be paid over 12 months. She is still in negotiations with the creditor to pay the settlement over 24 months. Thus far, she has been unable to convince her ex-husband to pay his share. She will pay it by herself if necessary. Applicant established a plan to resolve her financial problems, and she took significant action to implement that plan. Based on the record evidence as a whole, I conclude that the Government established security concerns under disqualifying conditions AG ¶¶ 19(a) and 19(c). Those security concerns are mitigated under the following mitigating conditions: AG ¶¶ 20(a), 20(b), and 20(d). The concerns over Applicant’s history of financial problems do not create doubt about her current reliability, trustworthiness, good judgment, and ability to protect classified information. In reaching this conclusion, I weighed the evidence as a whole and considered if the favorable evidence outweighed the unfavorable evidence. I also gave due consideration to the whole-person concept. Accordingly, I conclude that she met her ultimate burden of persuasion to show that it is clearly consistent with the national interest to grant her eligibility for access to classified information. This case is decided for Applicant. Edward W. Loughran Administrative Judge