ISCR Case 16-04042.h1

Case Headnote

ISCR Case No. 16-04042.h1

grantedSep 25, 2017· Hon. Robert Robinson Gales· hearing

Summary

A 44-year-old defense contractor employee was granted a security clearance despite initial concerns under Guideline F (Financial Considerations) due to outstanding debts. The Statement of Reasons (SOR) detailed three specific financial issues.

One issue involved a motorcycle purchased in October 2007 for $26,927. The applicant voluntarily surrendered the motorcycle in September 2009 after an offer to lower payments was rejected. He was unaware of a remaining deficiency until an August 2016 OPM interview, at which point the creditor reported an unpaid balance of $18,660. Although the applicant initially stated he would not resolve this debt, a collection agent later offered a settlement plan for six monthly payments totaling $5,628. The applicant did not provide documentation of this plan or payments, and this account remained unresolved at the time of the decision.

The other two issues concerned medical accounts with reported unpaid balances of $694 and $410. The applicant contacted the collection agent and was informed of a single delinquent medical account for $211.40, which he paid in full on August 8, 2017. The judge found that the applicant had made significant progress in resolving his financial issues, including settling the medical accounts and negotiating a payment plan for the motorcycle deficiency. The clearance was granted based on his demonstrated efforts to stabilize his finances and the absence of other delinquent accounts, with external factors also considered.

Why the Applicant Prevailed

The applicant resolved two of the three delinquent accounts identified in the SOR.
The applicant demonstrated a good-faith effort to negotiate a settlement for the remaining debt.
The applicant's financial situation was largely influenced by external factors beyond his control.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(a)appliedBehavior Happened Long Ago or Infrequently
AG ¶ 20(b)appliedConditions Largely Beyond the Person's Control
AG ¶ 20(d)appliedGood-faith Effort to Repay Overdue Creditors
AG ¶ 20(e)appliedReasonable Basis to Dispute the Legitimacy of the Debt

Key Rule Quoted

“Eligibility for a security clearance and access to classified information is granted.”

Procedural Posture

SOR issuedJan 30, 2017
Answer filedFeb 20, 2017
Hearing heldAug 23, 2017
Decision dateSep 13, 2017Record closed on this date.

Cite For

Mitigation of Financial Issues Under Guideline F
Good-faith Efforts to Resolve Debts
Impact of External Economic Factors on Financial Stability

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	In October 2007, Applicant purchased the above-referenced motorcycle for $26,927, requiring monthly payments of $430. Two years later, with the faltering economy and an unsold inventory, and his mortgage payments increasing, he called the motorcycle company to discuss the possibility of lowering his payments, but that offer was rejected. Applicant voluntarily surrendered the motorcycle to the dealership in September 2009. Applicant eventually relocated to Iraq, and also changed his residence address. Until recently, he never received written acknowledgment that the motorcycle had been repossessed, and he was never informed that he had a deficiency remaining. He never received a charge-off notice, collection letters, a Form 1099-C, or auction sales information. Although Applicant had made monthly payments for the period that he owned and possessed the motorcycle, when the value of the motorcycle was raised by him, the motorcycle company gave him credit for only $7,000. Applicant contended that the book value for the same year and model was $20,000. He first learned that there was a deficiency when he was interviewed by an investigator from the U.S. Office of Personnel Management (OPM) in August 2016. The creditor reported the unpaid balance as $18,660 – the same amount that was charged off in December 2009. During his OPM interview, Applicant acknowledged that he had made no effort to resolve the account, and stated that he would make no effort to do so. Applicant disputed the account with the credit reporting agencies, and it was removed from Equifax. On September 1, 2017, the collection agent informed Applicant that it was authorized to settle the account for a lump-sum payment of $5,600, provided that payment was made no later than September 8, 2017. The settlement offer was modified by the collection agent, and it offered a payment plan calling for six months of payments for $938, totaling $5,628. Applicant failed to submit any documentation to support proof of any such plan or payments. The account has not been resolved. $18,660	For Applicant	Auto Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (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 (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts (e) reasonable, documented basis to dispute the debt	Documented Debt Paid in Full Documented Debt Settlement Claimed Payment Plan with Creditor
1.b	These refer to two medical accounts with unpaid balances of $694 and $410 that were placed for collection. Applicant reached out to the only listed collection agent and he was told there was only one delinquent medical account under his Social Security number, date of birth, or address, and it was in the amount of $211.40. On August 8, 2017, Applicant paid the collection agent $211.40 – the remaining balance on the account(s). While the two accounts appear separately in Applicant’s May 2016 Equifax credit report, only one account for $211 appears in his August 2017 Equifax credit report. The account(s) have been resolved. Applicant acknowledged that if the bills had actually been $694 and $410, he would have paid those balances as well. $211	For Applicant	Medical Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (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 (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.c	specific text not stated in this decision	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

In October 2007, Applicant purchased the above-referenced motorcycle for $26,927, requiring monthly payments of $430. Two years later, with the faltering economy and an unsold inventory, and his mortgage payments increasing, he called the motorcycle company to discuss the possibility of lowering his payments, but that offer was rejected. Applicant voluntarily surrendered the motorcycle to the dealership in September 2009. Applicant eventually relocated to Iraq, and also changed his residence address. Until recently, he never received written acknowledgment that the motorcycle had been repossessed, and he was never informed that he had a deficiency remaining. He never received a charge-off notice, collection letters, a Form 1099-C, or auction sales information. Although Applicant had made monthly payments for the period that he owned and possessed the motorcycle, when the value of the motorcycle was raised by him, the motorcycle company gave him credit for only $7,000. Applicant contended that the book value for the same year and model was $20,000. He first learned that there was a deficiency when he was interviewed by an investigator from the U.S. Office of Personnel Management (OPM) in August 2016. The creditor reported the unpaid balance as $18,660 – the same amount that was charged off in December 2009. During his OPM interview, Applicant acknowledged that he had made no effort to resolve the account, and stated that he would make no effort to do so. Applicant disputed the account with the credit reporting agencies, and it was removed from Equifax. On September 1, 2017, the collection agent informed Applicant that it was authorized to settle the account for a lump-sum payment of $5,600, provided that payment was made no later than September 8, 2017. The settlement offer was modified by the collection agent, and it offered a payment plan calling for six months of payments for $938, totaling $5,628. Applicant failed to submit any documentation to support proof of any such plan or payments. The account has not been resolved.

$18,660

For Applicant

Auto Loan Debt

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(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

(c) received/receiving counseling; problem being resolved

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

(e) reasonable, documented basis to dispute the debt

Documented

Debt Paid in Full

Documented

Debt Settlement

Claimed

Payment Plan with Creditor

1.b

These refer to two medical accounts with unpaid balances of $694 and $410 that were placed for collection. Applicant reached out to the only listed collection agent and he was told there was only one delinquent medical account under his Social Security number, date of birth, or address, and it was in the amount of $211.40. On August 8, 2017, Applicant paid the collection agent $211.40 – the remaining balance on the account(s). While the two accounts appear separately in Applicant’s May 2016 Equifax credit report, only one account for $211 appears in his August 2017 Equifax credit report. The account(s) have been resolved. Applicant acknowledged that if the bills had actually been $694 and $410, he would have paid those balances as well.

$211

For Applicant

Medical Debt

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(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

(c) received/receiving counseling; problem being resolved

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

Documented

Debt Paid in Full

1.c

specific text not stated in this decision

For Applicant

Unspecified Financial

Unknown

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

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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

POLICIES

ANALYSIS

WHOLE PERSON CONCEPT

FORMAL FINDINGS

CONCLUSION

FOOTNOTES