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ISCR 25-00147: Guideline F security clearance hearing, denied (2025) · CASE

ISCR Case 25-00147denied

Case headnote

ISCR Case No. 25-00147

deniedNov 19, 2025· Hon. Erin C. Hogan· hearing

Synopsis

The applicant, a 48-year-old employee of a DOD contractor, sought a security clearance under Guideline F due to financial considerations. She filed for Chapter 7 bankruptcy in May 2019, which discharged her debts, but subsequently incurred 13 additional delinquent debts totaling approximately $21,697. The judge denied the application, citing unresolved financial obligations and lack of evidence of financial responsibility.

Why the applicant was denied

The applicant incurred 13 delinquent debts totaling approximately $21,697 after her bankruptcy discharge.
She provided no updated information or documentation regarding her delinquent debts after the SOR was issued.
The applicant failed to demonstrate a good-faith effort to resolve her financial issues.

Conditions referenced

Disqualifying

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

Mitigating

AG ¶ 20(c)appliedReceived Financial CounselingThe applicant completed a financial counseling course as part of her bankruptcy.
AG ¶ 20(d)appliedGood-faith Effort to Repay DebtsThe debt alleged in SOR ¶ 1.m was resolved.

Key rule quoted

“An applicant has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue her security clearance.”
ISCR Case No. 01-20700 at 3 (App. Bd. Dec. 19, 2002)

Procedural posture

SOR issuedFeb 5, 2025
Answer filedMar 1, 2025
Hearing heldN/ADecision based on written record.
Decision dateNov 19, 2025

Cite for

Denial Based on Unresolved Financial Obligations Under Guideline F
Importance of Providing Evidence of Financial Responsibility
Impact of Post-bankruptcy Debts on Security Clearance Eligibility

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

From the decision

Facts this decision states, each with the exact sentence it comes from. Descriptive of the record, not an assessment.

Tenure: ~2 years: “She has been employed with the DOD contractor since July 2023.”
Delinquent debt cited: $21,697 (bankruptcy discharged): “The total balance of the post-bankruptcy delinquent debts is approximately $21,697.”

Standardized Decision Profile

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

Posture: Decision on RecordDecided: denied

The judge found multiple financial concerns under Guideline F, including a Chapter 7 bankruptcy and several delinquent debts totaling approximately $21,697. While one debt was found to be paid, the overall financial situation was deemed unresolved, leading to a decision against the applicant.

The sub-allegation breakdown is part of the Professional plan. See what it includes.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation

Descriptive standardized rendering of a decided public case. 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

APPEARANCES

______________ ______________ DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS In the matter of: Applicant for Security Clearance ) ) ) ) ) ISCR Case No. 25-00147 Appearances For Government: Nicole A. Smith, Esq., Department Counsel For Applicant: Pro Se 11/19/2025

STATEMENT OF CASE

HOGAN, Erin C., Administrative Judge: This case involves security concerns raised under Guideline F (Financial Considerations). Eligibility for access to classified information is denied. Statement of the Case Applicant submitted a security clearance application (SCA) on July 16, 2024. On February 5, 2025, the Defense Counterintelligence and Security Agency (DCSA) sent her a Statement of Reasons (SOR) alleging security concerns under Guideline F. The DCSA acted under Executive Order (EO) 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; Department of Defense (DOD) Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) implemented by the DOD on June 8, 2017. Applicant timely answered the SOR and requested a decision based on the written record in lieu of a hearing. On June 4, 2025, the Government sent Applicant a complete copy of its written case, a file of relevant material (FORM), including pleadings and evidentiary documents identified as Items 1 through 7. She was given an opportunity to

submit a documentary response setting forth objections, rebuttal, extenuation, mitigation, or explanation to the Government’s evidence. She received the FORM on June 11, 2025. She was given 30 days to submit a Response to the FORM. She did not submit a response. The case was forwarded to the DOHA Hearing Office on July 25, 2025, and assigned to me on November 14, 2025. Evidentiary Matters Items 1 and 2 contain the pleadings in the case and are part of the record. Items 3 through 7 are admitted into evidence.

FINDINGS OF FACT

Applicant, age 48, is an employee of a DOD contractor who is seeking a security clearance for the first time. She has been employed with the DOD contractor since July 2023. She has no military service. She is a high school graduate and has some college credits. She is single and has two adult children. (Item 3) The SOR alleged Applicant filed for Chapter 7 bankruptcy in May 2019. Her total assets were listed as $8,704 and her total liabilities were listed as $68,581. She completed a financial counseling course as a requirement of her bankruptcy. Her debts were discharged in September 2019 (SOR ¶ 1.a: Item 6). The SOR also alleged 13 delinquent debts incurred by Applicant after her Chapter 7 bankruptcy discharge in 2019. The total balance of the post-bankruptcy delinquent debts is approximately $21,697. The delinquent debts can be found in credit reports from August 2024 and June 2025 (Items 4 and 5) The debts include a $1,274 delinquent account that was placed for collection (SOR ¶ 1.b); a $1,232 delinquent cell phone account that was placed for collection (SOR ¶ 1.c), a $1,057 delinquent account that was placed for collection (SOR ¶ 1.d); a $985 delinquent cell phone account that was placed for collection (SOR ¶ 1.e); an $896 delinquent account that was charged off (SOR ¶ 1.f); a $635 delinquent account that was placed for collection (SOR ¶ 1.g); and a $474 delinquent credit card account that was placed for collection. (SOR ¶ 1.h) Additional delinquent debts include a $431 delinquent account that was placed for collection (SOR ¶ 1.i); a $418 delinquent credit card account that was placed for collection (SOR ¶ 1.j), a $156 delinquent account that was placed for collection (SOR ¶ 1.k); a delinquent debt with an unknown balance that was charged off (SOR ¶ 1.1); a delinquent debt with an unknown balance that was charged off (SOR ¶ 1.m); and a $14,139 voluntary automobile repossession that was charged off. (SOR ¶ 1.n) In her response to the SOR, Applicant admitted all of the allegations in the SOR. In her response, she provided no updated information about her delinquent debts. She did not respond the Government’s FORM. A credit report dated June 4, 2025, indicates

the debt alleged in SOR ¶ 1.mis paid. (Item 5 at 2) This debt is found for Applicant. All other debts remain unresolved.

POLICIES

“[N]o one has a ‘right’ to a security clearance.” (Department of the Navy v. Egan, 484 U.S. 518, 528 (1988)). As Commander in Chief, the President has the authority to “control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to have access to such information.” (Egan at 527). The President has authorized the Secretary of Defense or his designee to grant applicants eligibility for access to classified information “only upon a finding that it is clearly consistent with the national interest to do so.” (EO 10865 § 2) Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the AG. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, an administrative judge applies these guidelines in conjunction with an evaluation of the whole person. An administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. An administrative judge must consider all available and reliable information about the person, past and present, favorable and unfavorable. The Government reposes a high degree of trust and confidence in persons with access to classified information. This relationship transcends normal duty hours and endures throughout off-duty hours. Decisions include, by necessity, consideration of the possible risk that the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation about potential, rather than actual, risk of compromise of classified information. Clearance decisions must be made “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” (EO 10865 § 7). Thus, a decision to deny a security clearance is merely an indication the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance. Initially, the Government must establish, by substantial evidence, conditions in the personal or professional history of the applicant that may disqualify the applicant from being eligible for access to classified information. The Government has the burden of establishing controverted facts alleged in the SOR. (Egan, 484 U.S. at 531). “Substantial evidence” is “more than a scintilla but less than a preponderance.” (See v. Washington Metro. Area Transit Auth., 36 F.3d 375, 380 (4th Cir. 1994)). The guidelines presume a nexus or rational connection between proven conduct under any of the criteria listed therein and an applicant’s security suitability. (ISCR Case No. 15-01253 at 3 (App. Bd. Apr. 20, 2016)). Once the Government establishes a disqualifying condition by substantial evidence, the burden shifts to the applicant to rebut, explain, extenuate, or mitigate the facts. (Directive ¶ E3.1.15). An applicant has the burden of proving a mitigating condition, and the burden of disproving

it never shifts to the Government. (ISCR Case No. 02-31154 at 5 (App. Bd. Sep. 22, 2005)) An applicant “has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue her security clearance.” (ISCR Case No. 01- 20700 at 3 (App. Bd. Dec. 19, 2002)). “[S]ecurity clearance determinations should err, if they must, on the side of denials.” (Egan, 484 U.S. at 531; AG ¶ 2(b))

ANALYSIS

Guideline F: Financial Considerations The concern under this guideline is set out in AG ¶ 18: Failure to live within one's means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual's reliability, trustworthiness, and ability to protect classified or sensitive information. Financial distress can also be caused or exacerbated by, and thus can be a possible indicator of, other issues of personnel security concern such as excessive gambling, mental health conditions, substance misuse, or alcohol abuse or dependence. An individual who is financially overextended is at greater risk of having to engage in illegal or otherwise questionable acts to generate funds.

This concern is broader than the possibility that a person might knowingly compromise classified information to raise money. It encompasses concerns about a person’s self-control, judgment, and other qualities essential to protecting classified information. A person who is financially irresponsible may also be irresponsible, unconcerned, or negligent in handling and safeguarding classified information. (ISCR Case No. 11-05365 at 3 (App. Bd. May 1, 2012). AG ¶ 19 notes several disqualifying conditions that could raise security concerns. The disqualifying conditions that are relevant to Applicant’s case include: (a) inability to satisfy debts; and (c) a history of not meeting financial obligations. AG ¶ 19(a) and AG ¶ 19(c) apply to Applicant’s delinquent debts alleged in SOR ¶¶ 1.a through 1.n. The total approximate balance of the delinquent debt is $20,139. The largest debt is the $14,139 car repossession debt alleged in SOR ¶ 1.n. The remaining delinquent debts total approximately $7,558. AG ¶ 20 describes conditions that could mitigate security concerns. The following are potentially applicable in this case:

(a) the behavior happened so long ago, was so infrequent, or occurred under such circumstances that it is unlikely to recur and does not cast doubt on in the individual’s current reliability, trustworthiness, or good judgment; (b) the conditions that resulted in the financial problem were largely beyond the per

son's control (e.g., loss of employment, a business downturn, unexpected medical emergency, a death, divorce or separation, clear victimization by

predatory lending practices, or identity theft), and the individual acted responsibly under the circumstances; (c) the individual has received or is receiving financial counseling for the problem from a legitimate and credible source, such as a non-profit counseling service, and there are clear indications that the problem is being resolved or is under control; (d) the individual initiated and is adhering to a good-faith effort to repay overdue creditors or otherwise resolve debts; and (e) the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue. AG ¶ 20(c) partially applies because Applicant completed a financial counseling course in conjunction with her Chapter 7 bankruptcy. However, this mitigating condition is given little weight because Applicant continued to incur delinquent debt after her bankruptcy discharge. At the close of the record her financial situation remains unresolved. AG ¶ 20(d) applies with respect to the debt alleged in SOR ¶ 1.mbecause the June 2025 credit report indicates that the debt is resolved. None of the mitigating conditions apply to the other debts alleged in the SOR. Applicant provided no documentation about the status of any of the delinquent debts alleged in the SOR. She provided no proof that any payments were made towards any of the debts, such as receipts from the creditor, copies of bank statements or cancelled checks. Overall, Applicant failed to meet her burden of proof to mitigate the concerns raised under Financial Considerations.

WHOLE PERSON CONCEPT

Under AG ¶ 2(c), the ultimate determination of whether the granting or continuing of national security eligibility is clearly consistent with the interests of national security must be an overall commonsense judgment based upon careful consideration of the adjudicative guidelines, each of which is to be evaluated in the context of the whole

person. An administrative judge should consider the nine adjudicative process factors listed at AG ¶ 2(d): (1) the nature, extent, and seriousness of the conduct; (2) the circumstances surrounding the conduct, to include knowledgeable participation; (3) the frequency and recency of the conduct; (4) the individual’s age and maturity at the time of the conduct; (5) the extent to which participation is voluntary; (6) the presence or absence of rehabilitation and other permanent behavioral changes; (7) the motivation for the conduct; (8) the potential for pressure, coercion, exploitation, or duress; and (9) the likelihood of continuation or recurrence. I have incorporated my comments under Guideline F in my whole-person analysis, and I have considered the factors in AG ¶ 2(d). Applicant failed to provided evidence of her efforts to resolve or dispute her delinquent accounts. After weighing the disqualifying and mitigating conditions under Guideline F and evaluating all the evidence in the context of the whole person, I conclude that Applicant has not mitigated the security concerns raised under financial considerations. This decision should not be construed as a determination that Applicant cannot or will not attain the state of reform necessary for award of a security clearance in the future. With a longer track record of financial responsibility, she may be able to demonstrate persuasive evidence of her security clearance worthiness. Overall, the record evidence leaves me with questions and doubts as to her eligibility and suitability for a security clearance at this time.

FORMAL FINDINGS

Formal findings on the allegations set forth in the SOR, as required by Section E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F: AGAINST APPLICANT Subparagraphs 1.a – 1.1, 1.n: Against Applicant Subparagraph 1.m: For Applicant

CONCLUSION

I conclude that it is not clearly consistent with the interests of national security to grant Applicant eligibility for access to classified information. Clearance is denied. Erin C. Hogan Administrative Judge