ISCR Case 16-03916.h1

Case Headnote

ISCR Case No. 16-03916.h1

deniedJul 27, 2018· Hon. Candace Le'i Garcia· hearing

Summary

A 48-year-old woman was denied a security clearance under Guideline F (Financial Considerations) due to a history of significant financial difficulties. The applicant faced concerns stemming from multiple delinquent debts, including a federal tax lien and judgments, which collectively exceeded $100,000.

Specific allegations included a mortgage account on her condominium, which became delinquent in 2014 after a layoff, accumulating $48,152 past due before a modification in January 2017. Other debts included a charged-off credit card for $1,604 and a store credit card for $330, both incurred during a prior marriage. A federal tax lien for $32,689 was placed against her in April 2015, and a $14,424 judgment was filed in 2014 by her HOA for delinquent dues.

Despite filing for Chapter 13 bankruptcy in July 2017, with her plan confirmed in May 2018, and engaging in financial counseling, the judge found that the applicant had not sufficiently mitigated the security concerns. While personal circumstances like unemployment and health issues contributed to her financial problems, they were not deemed sufficient to overcome the pattern of delinquent debts and inconsistent payments.

Why the Applicant Was Denied

The applicant had multiple delinquent debts totaling over $100,000, including a federal tax lien and judgments.
She filed for Chapter 13 bankruptcy but had not consistently made payments on her outstanding debts, including HOA dues.
The applicant's financial issues were exacerbated by personal circumstances, including unemployment and health issues, but these were not sufficient to mitigate the security concerns.

Conditions Referenced

Disqualifying

F.3raisedInability to Satisfy Debts
F.2raisedDelinquent Debts

Mitigating

F.3rejectedDebt Repayment EffortsThe applicant's efforts to address her debts through bankruptcy and financial counseling were insufficient to mitigate the concerns.
F.2rejectedFinancial CounselingWhile the applicant received financial counseling, it did not lead to a resolution of her significant debts.

Key Rule Quoted

“"The security clearance decision is based on the whole person concept, which includes consideration of the applicant's character, conduct, and circumstances."”

Procedural Posture

SOR issuedJan 30, 2017
Answer filedFeb 23, 2017
Hearing heldFeb 16, 2018record left open until March 30, 2018 for additional documentation
Decision dateJul 27, 2018

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations Under Guideline F
Insufficient Mitigation of Financial Concerns Despite Bankruptcy Filing
Impact of Personal Circumstances on Financial Stability and 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.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	SOR ¶ 1.a is for a real estate mortgage account on Applicant’s condominium that she purchased in May 2007. As of the SOR, the account was $48,152 past due with a total balance of $386,838. It became delinquent in 2014, after she was laid off. She did not make any mortgage payments from November 2014 to April 2015. She attempted to short sell the home, but she did not receive an offer until nearly a year had passed and the offer was rejected in August 2016. She had difficulty selling her home because she has had a roofing problem since at least late 2016, which has caused water to leak into her home. Despite her attempts to get her HOA to repair her roof, the problem persisted as of the hearing date. In August 2016, she started the mortgage modification process. She was approved in January 2017, her mortgage was modified to $1,934 monthly, and she has since been current. $386,838	Against Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.b	SOR ¶ 1.b is for a credit card debt incurred during Applicant’s prior marriage that was charged off for $1,604. She believed it was paid, but learned it was not after her divorce. As of February 2017, she paid $827 and a remaining balance of $777 was due. She listed this debt in her bankruptcy case. $1,604	Against Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.c	SOR ¶ 1.c is for a store credit card also incurred during Applicant’s prior marriage. It was charged off for $330. She also believed it was paid, until the creditor informed her that it was outstanding. She indicated that when she tried to pay it, she was told that she could not do so because of the statute of limitations. $330	Against Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.j	In April 2015, the IRS placed a federal tax lien against Applicant for $32,689, as alleged in SOR ¶ 1.j. The circumstances that led to the IRS lien were discussed by Applicant’s tax preparer, who testified at the hearing as set forth below. $32,689	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.k	SOR ¶ 1.k is for a $14,424 judgment filed against Applicant in 2014 by her HOA for delinquent HOA dues. Applicant first became delinquent with her HOA dues of $199 monthly in 2009, when she had to care for her ill mother. She was delinquent for six months. She requested a payment plan with her HOA, her request was denied, and the HOA then placed a lien against her property. She testified that her mother recovered and she was subsequently able to bring her HOA dues current. $14,424	Against Applicant	Judgment Against Applicant	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.t	Applicant filed Chapter 13 bankruptcy in July 2017, as alleged in SOR ¶ 1.t. She hired a bankruptcy attorney to do so, who testified at the hearing as discussed below. On May 21, 2018, the bankruptcy court confirmed Applicant’s bankruptcy plan.	Against Applicant	Bankruptcy Filing	Admitted	—	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

SOR ¶ 1.a is for a real estate mortgage account on Applicant’s condominium that she purchased in May 2007. As of the SOR, the account was $48,152 past due with a total balance of $386,838. It became delinquent in 2014, after she was laid off. She did not make any mortgage payments from November 2014 to April 2015. She attempted to short sell the home, but she did not receive an offer until nearly a year had passed and the offer was rejected in August 2016. She had difficulty selling her home because she has had a roofing problem since at least late 2016, which has caused water to leak into her home. Despite her attempts to get her HOA to repair her roof, the problem persisted as of the hearing date. In August 2016, she started the mortgage modification process. She was approved in January 2017, her mortgage was modified to $1,934 monthly, and she has since been current.

$386,838

Against Applicant

Mortgage or Home Loan Debt

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.b

SOR ¶ 1.b is for a credit card debt incurred during Applicant’s prior marriage that was charged off for $1,604. She believed it was paid, but learned it was not after her divorce. As of February 2017, she paid $827 and a remaining balance of $777 was due. She listed this debt in her bankruptcy case.

$1,604

Against Applicant

Credit Card Debt

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.c

SOR ¶ 1.c is for a store credit card also incurred during Applicant’s prior marriage. It was charged off for $330. She also believed it was paid, until the creditor informed her that it was outstanding. She indicated that when she tried to pay it, she was told that she could not do so because of the statute of limitations.

$330

Against Applicant

Credit Card Debt

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.j

In April 2015, the IRS placed a federal tax lien against Applicant for $32,689, as alleged in SOR ¶ 1.j. The circumstances that led to the IRS lien were discussed by Applicant’s tax preparer, who testified at the hearing as set forth below.

$32,689

Against Applicant

Tax Unpaid

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.k

SOR ¶ 1.k is for a $14,424 judgment filed against Applicant in 2014 by her HOA for delinquent HOA dues. Applicant first became delinquent with her HOA dues of $199 monthly in 2009, when she had to care for her ill mother. She was delinquent for six months. She requested a payment plan with her HOA, her request was denied, and the HOA then placed a lien against her property. She testified that her mother recovered and she was subsequently able to bring her HOA dues current.

$14,424

Against Applicant

Judgment Against Applicant

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.t

Applicant filed Chapter 13 bankruptcy in July 2017, as alleged in SOR ¶ 1.t. She hired a bankruptcy attorney to do so, who testified at the hearing as discussed below. On May 21, 2018, the bankruptcy court confirmed Applicant’s bankruptcy plan.

Against Applicant

Bankruptcy Filing

Admitted

—

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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

FOOTNOTES