ISCR Case 17-03372.h1

Case Headnote

ISCR Case No. 17-03372.h1

deniedJul 27, 2018· Hon. Paul J. Mason· hearing

Summary

A 63-year-old heating and air-conditioning mechanic was denied a security clearance under Guideline F (Financial Considerations) due to six delinquent debts totaling over $39,000. Despite having significant financial resources, the applicant failed to address these debts in a timely manner, raising concerns about his judgment and reliability.

The applicant's Statement of Reasons detailed several outstanding financial obligations. These included a corporate credit card account, a personal credit card with alleged fraudulent charges, another credit card with unauthorized charges, a judgment filed against his former business, an unpaid business credit card, and an unknown account transferred for collection. While some debts were partially addressed or settled through a debt repair firm, the applicant often provided inconsistent explanations and lacked sufficient documentation to verify his claims or the resolution of the debts. For instance, one corporate debt was not disclosed in his e-QIP, and he initially intended to do nothing about it. Another debt, despite a claimed settlement, lacked proof of payment.

The denial was based on the applicant's failure to begin resolving his debts until three months after receiving the Statement of Reasons. The adjudicator found that he provided insufficient evidence of timely actions to address his financial obligations, undermining his credibility. Furthermore, his explanations for the debts were inconsistent and lacked supporting documentation, leading to the denial of his security clearance.

Why the Applicant Was Denied

The applicant had six delinquent debts totaling over $39,000, which he did not begin to resolve until three months after receiving the SOR.
He provided insufficient evidence of timely actions to address his debts, undermining his credibility.
The applicant's explanations for his debts were inconsistent and lacked supporting documentation.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(a)rejectedBehavior Happened Long Ago or InfrequentlyThe applicant's financial issues were recent and ongoing.
AG ¶ 20(b)rejectedConditions Largely Beyond the Person's ControlThe applicant did not provide sufficient evidence of how his business failure impacted his financial situation.
AG ¶ 20(c)rejectedReceived Financial CounselingNo evidence of financial counseling was provided.
AG ¶ 20(d)rejectedGood-faith Effort to Repay DebtsThe applicant's actions were not timely or documented adequately.
AG ¶ 20(e)rejectedReasonable Basis to Dispute DebtsThe applicant did not provide documented proof to substantiate his disputes.

Key Rule Quoted

“Any doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.”

Procedural Posture

SOR issuedOct 13, 2017
Answer filedNov 1, 2017
Hearing held—Decided on written record.
Decision dateJul 27, 2018

Cite For

Insufficient Evidence of Timely Debt Resolution Under Guideline F
Inconsistent Explanations for Financial Obligations
Impact of Financial Distress 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.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	This is a corporate credit card account that became delinquent In August 2012. Applicant opened this account in December 2002. He did not disclose this debt in his May 2015 e-QIP because this was a business account. Applicant stated in his May 2017 PSI that his intention was to do nothing about the account since it was charged off and the business was dissolved. On February 12, 2018, Applicant’s debt repair firm indicated by letter that the creditor agreed to settle the account for 12 monthly payments of $473 a month, with a settlement letter to be sent within 48 hours of the settlement request. There is no settlement letter, but there is confirmation of one payment of $473 on February 8, 2018.	Against Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	This is a credit card account that became delinquent in October 2013. This account was Applicant’s responsibility. In his May 2017 PSI, he claimed that $2,000 in fraudulent charges appeared on the account. The original creditor told him that they would pay the charges and that he should close the account which he did. The collection agency informed him in June 2015 that he still owed a balance on the account and filed a legal action against him. He indicated the case was dismissed in September 2015, when the collection agency was unable to establish proof of purchase. Applicant indicated his credit firm was going to have the account removed from his credit report, however, the delinquent debt still appears in the Government’s 2017 credit report. On February 12, 2018, the credit repair firm indicated by letter that on February 2, 2018, the creditor accepted a settlement check for $1,586. No documentation, i.e., canceled check or other proof of payment, was provided. $1,586	Against Applicant	Credit Card Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	This is a credit card that became delinquent in December 2012. In his May 2017 PSI and his November 2017 answer to the SOR, he claimed that a thief stole the card from his mailbox and made unauthorized charges. On February 2, 2018, the collection agency notified Applicant by letter describing Applicant’s agreement to settle the debt with a payment of $1,283, to be paid by February 2, 2018. On February 14, 2018, the collection agency informed Applicant by letter that the balance on the debt was zero. $1,283	For Applicant	Credit Card Debt	Denied	—	—	Credited Debt Paid in Full
1.d	This is a judgment that was filed against Applicant in January 2014. Applicant explained that while his former business was still operating, he ordered some items in January 2011, but the items he received were not what he ordered. The creditor filed the judgment against Applicant and his company. His attorney advised him to accept the judgment if it was in the company’s name and Applicant’s name was removed. The court accepted the judgment in only the company’s name. Applicant has not paid the judgment because it is a debt of his former business. He provided no evidence from his debt repair firm, i.e., a current credit report or documentation from the creditor or collection agency, verifying that the he was removed from the account.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	This is an unpaid business credit card that became delinquent in November 2013. Applicant opened the business account in February 2000. He claimed that the account was still in his name, but he did not owe anything personally. His company went out of business and was sold because it could not pay off the debt. Applicant did not intend to address the account since it was charged off and the responsibility of his failed business. In his answer to the SOR, he claimed that the debt was no longer posted in his credit report. The debt still appears in the Government’s 2017 and 2015 credit reports.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	This is an unknown account that was transferred for collection in February 2014. Applicant claimed “these unlawful charges were part [of] a class action lawsuit that they [bank] lost and sent me a settlement check.” He indicated that the charges were being disputed by his credit repair firm so that they could be removed from his credit report. No additional information or documentation from his debt repair firm was provided.	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

This is a corporate credit card account that became delinquent In August 2012. Applicant opened this account in December 2002. He did not disclose this debt in his May 2015 e-QIP because this was a business account. Applicant stated in his May 2017 PSI that his intention was to do nothing about the account since it was charged off and the business was dissolved. On February 12, 2018, Applicant’s debt repair firm indicated by letter that the creditor agreed to settle the account for 12 monthly payments of $473 a month, with a settlement letter to be sent within 48 hours of the settlement request. There is no settlement letter, but there is confirmation of one payment of $473 on February 8, 2018.

Against Applicant

Credit Card Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.b

This is a credit card account that became delinquent in October 2013. This account was Applicant’s responsibility. In his May 2017 PSI, he claimed that $2,000 in fraudulent charges appeared on the account. The original creditor told him that they would pay the charges and that he should close the account which he did. The collection agency informed him in June 2015 that he still owed a balance on the account and filed a legal action against him. He indicated the case was dismissed in September 2015, when the collection agency was unable to establish proof of purchase. Applicant indicated his credit firm was going to have the account removed from his credit report, however, the delinquent debt still appears in the Government’s 2017 credit report. On February 12, 2018, the credit repair firm indicated by letter that on February 2, 2018, the creditor accepted a settlement check for $1,586. No documentation, i.e., canceled check or other proof of payment, was provided.

$1,586

Against Applicant

Credit Card Debt

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.c

This is a credit card that became delinquent in December 2012. In his May 2017 PSI and his November 2017 answer to the SOR, he claimed that a thief stole the card from his mailbox and made unauthorized charges. On February 2, 2018, the collection agency notified Applicant by letter describing Applicant’s agreement to settle the debt with a payment of $1,283, to be paid by February 2, 2018. On February 14, 2018, the collection agency informed Applicant by letter that the balance on the debt was zero.

$1,283

For Applicant

Credit Card Debt

Denied

—

Credited

Debt Paid in Full

1.d

This is a judgment that was filed against Applicant in January 2014. Applicant explained that while his former business was still operating, he ordered some items in January 2011, but the items he received were not what he ordered. The creditor filed the judgment against Applicant and his company. His attorney advised him to accept the judgment if it was in the company’s name and Applicant’s name was removed. The court accepted the judgment in only the company’s name. Applicant has not paid the judgment because it is a debt of his former business. He provided no evidence from his debt repair firm, i.e., a current credit report or documentation from the creditor or collection agency, verifying that the he was removed from the account.

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.e

This is an unpaid business credit card that became delinquent in November 2013. Applicant opened the business account in February 2000. He claimed that the account was still in his name, but he did not owe anything personally. His company went out of business and was sold because it could not pay off the debt. Applicant did not intend to address the account since it was charged off and the responsibility of his failed business. In his answer to the SOR, he claimed that the debt was no longer posted in his credit report. The debt still appears in the Government’s 2017 and 2015 credit reports.

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.f

This is an unknown account that was transferred for collection in February 2014. Applicant claimed “these unlawful charges were part [of] a class action lawsuit that they [bank] lost and sent me a settlement check.” He indicated that the charges were being disputed by his credit repair firm so that they could be removed from his credit report. No additional information or documentation from his debt repair firm was provided.

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

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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