Loading case…

Summary

The applicant, a 51-year-old principal systems engineer with a history of financial issues, contested the denial of his security clearance under Guideline F due to unresolved debts totaling approximately $57,681, including a Chapter 7 bankruptcy. Despite some efforts to settle debts, the judge found the applicant's financial situation concerning and insufficiently mitigated, leading to a denial of clearance.

Under Guideline F (Financial Considerations), the Statement of Reasons alleged the following: Applicant has a history of financial problems, including a Chapter 7 bankruptcy and several delinquent accounts totaling about $57,681 (1.a). The SOR allegations consisted of a Chapter 7 bankruptcy case, filed in 2005 and discharged in 2006, and seven delinquent accounts, either charged off or in collection, ranging in amounts from $314 to $15,139 for a total of about $57,681 (1.b). In his answer, he denied the $314 collection account and indicated he was suing in small claims court to rectify the matter (1.c). Applicant attributed the Chapter 7 bankruptcy case to a business failure (1.d). He bought a business (a gas station) in about 1999 or 2000, the business was not profitable, and it failed about a year after the purchase (1.e). He delayed filing the bankruptcy case until 2005 because he wanted to pay his debts (1.f). The bankruptcy paperwork shows he claimed $87,307 in liabilities of which $79,400 was unsecured indebtedness (1.g). Post-bankruptcy, Applicant attributed his financial problems to periodic unemployment as well as the time, effort, and money he devoted over a period of years providing care for his ailing father, who eventually passed away in November 2012 (1.h). He also explained that his ability to resolve his financial problems was hindered by a loss of documents due to storm damage from Hurricane Harvey in 2017 (1.i). Concerning the seven delinquent accounts for about $57,681, Applicant established that he settled the $1,282 charged-off account for $400 in October 2018, and paid in full the $1,253 charged-off account in July 2018 (1.j). Applicant disputes the validity of the $314 collection account, which stems from a claim of money owed after he vacated an apartment (1.k). In May 2019, he initiated a small-claims court action suing the creditor (1.l). Three of the delinquent accounts are with the same creditor, a federal credit union, consisting of a charged-off account for $13,506, a charged-off account for $12,916, and a collection account for $15,139 (1.m). The delinquent accounts are reflected in credit reports from February 2016, October 2017, June 2018, and November 2018 (1.n). The $15,139 collection account is not reflected in the most recent credit reports from 2018, while the two charged-off accounts are reflected in all four credit reports (1.o). Applicant discussed these accounts at length during the hearing, he disputed the validity of a third delinquent account with the credit union, but I found his testimony to be unclear (1.p). Given the ambiguity, and based on the clarity of the four credit reports, I find the current existence of the two charged-off accounts for $13,506 and $12,916, but not the $15,139 collection account (1.q). Applicant stated that he made some efforts to resolve the accounts, including an impromptu in-person inquiry at a branch office of the credit union (1.r). But the two charged-off accounts are still outstanding, and Applicant did not have a plan in place to address them (1.s). The other delinquent account is a $13,271 charged-off account stemming from a deficiency balance on an automobile loan after involuntary repossession (1.t). Applicant purchased the vehicle in 2015 for his job at the time (1.u). He made the monthly payments on the loan until he defaulted in about June 2017, which was during his most recent period of unemployment from February 2017 until October 2017 (1.v). He did not make any payments on the deficiency balance, leading to the charged-off account (1.w). Applicant stated that the account was purchased by another creditor, and that he will do his best to resolve it (1.x). Applicant stated that his current financial situation is under control, that he is meeting his current living expenses, and he is not incurring new delinquent debts (1.y). His annual salary is about $135,000 (1.z). His wife is not employed outside the home (1.aa). He has a 401(k) account with a balance of about $22,000 (1.ab). He reported having about $1,500 in a checking account and two paid-off automobiles (1.ac). A checking account statement reflected a balance of $2,540 as of April 30, 2019 (1.ad).

The judge denied the clearance. The government raised disqualifying conditions AG ¶ 19(a), AG ¶ 19(c). The judge applied mitigating conditions AG ¶ 20(b), AG ¶ 20(d). The decision turned on the following: The applicant has a long-standing pattern of unresolved financial problems; The applicant failed to demonstrate a realistic plan to address his significant debts; The applicant's financial irresponsibility raised doubts about his reliability and trustworthiness.

Why the Applicant Was Denied

• The applicant has a long-standing pattern of unresolved financial problems.
• The applicant failed to demonstrate a realistic plan to address his significant debts.
• The applicant's financial irresponsibility raised doubts about his reliability and trustworthiness.

Conditions Referenced

Key Rule Quoted

“It is well-established law that no one has a right to a security clearance.”

Procedural Posture

• SOR issuedAug 15, 2018
• Answer filedOct 18, 2018
• Hearing heldJun 11, 2019
• Decision dateSep 12, 2019

Cite For

• Denial of Security Clearance Due to Unresolved Financial Issues Under Guideline F
• Importance of Demonstrating a Realistic Plan to Address Financial Obligations
• Impact of Financial Irresponsibility on Reliability and Trustworthiness Assessments