ISCR Case 17-03852.h1

Case Headnote

ISCR Case No. 17-03852.h1

deniedJul 12, 2018· Hon. Carol G. Ricciardello· hearing

Summary

A 51-year-old applicant with a master's degree and military service was denied a security clearance under Guideline F (Financial Considerations) due to unresolved financial issues. The applicant's Statement of Reasons detailed several debts, primarily stemming from real estate investments. These included a mortgage debt of $71,290, with $17,058 past due, for which a short sale or deed-in-lieu was being negotiated. Another property was foreclosed in December 2014 after loan modification attempts failed.

A second mortgage debt of $78,375 was partially resolved through a payment plan requiring a $10,000 lump sum and $608 monthly payments for four years, with the balance reduced to $48,308 and consistent payments made. Additionally, a $52,033 mortgage debt, with $37,481 past due, was also subject to short sale or deed-in-lieu negotiations. A credit card debt of $24,831 was settled for 45% of the amount, involving monthly payments and a lump sum, with the applicant reporting current payments.

Despite the applicant's efforts to negotiate settlements and maintain a stable income, the judge found insufficient evidence of a good-faith effort to resolve all debts. The denial was based on the applicant having unresolved delinquent debts, financial difficulties largely attributed to poor investment decisions and delayed action, and the determination that the applicant's actions, even when attorney-advised, did not demonstrate reliability or trustworthiness.

Why the Applicant Was Denied

Applicant has unresolved delinquent debts that he is unable or unwilling to pay.
The applicant's financial difficulties were largely self-inflicted due to poor investment decisions and lack of timely action to resolve debts.
The applicant's actions, advised by his attorney, did not reflect reliability or trustworthiness.

Conditions Referenced

Disqualifying

F.1.araisedInability to Satisfy Debts
F.1.braisedUnwillingness to Satisfy Debts Regardless of the Ability to Do So
F.1.craisedA History of Not Meeting Financial Obligations

Mitigating

F.2.arejectedThe Behavior Happened so Long Ago, Was so Infrequent, or Occurred Under Such Circumstances That It Is Unlikely to Recur
F.2.brejectedThe Conditions That Resulted in the Financial Problem Were Largely Beyond the Person’s Control
F.2.crejectedThe Individual Has Received or Is Receiving Financial Counseling for the Problem
F.2.dappliedThe Individual Initiated and Is Adhering to a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsApplicant has a settlement payment plan for the debt in SOR ¶ 1.c that he has been consistently paying since 2015.

Key Rule Quoted

“A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence.”

Procedural Posture

SOR issuedNov 13, 2017
Answer filedDec 14, 2017
Hearing held—Decided on the written record.
Decision dateJul 12, 2018

Cite For

Insufficient Evidence of Good-faith Effort to Resolve Debts Under Guideline F
Impact of Financial Decisions on Security Clearance Eligibility
Importance of Demonstrating Reliability and Trustworthiness in Financial Matters

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	Applicant disclosed in his SCA the mortgage debt alleged in SOR ¶ 1.a ($71,290, past due $17,058). He indicated that he and his attorney were negotiating with the mortgage company on a possible short sale or deed-in-lieu to resolve the debt. $71,290	Against Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.b	Applicant stated in his answer for the debt in SOR ¶ 1.b that he could not obtain a loan modification and using a short sale was challenging, so the property was foreclosed in December 2014. $0	Against Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.c	Applicant disclosed on his SCA a debt for a second mortgage ($78,375). This debt is reflected in SOR ¶ 1.c. He reached a payment plan with the lender to pay 40% of the debt. He was required to make a lump sum payment of $10,000 and monthly payments of $608 for four years with payments to begin in July 2015. He stated in his FORM response that the balance is now $48,308. He provided documentary proof that he has been making consistent payments on this debt as required. $78,375	For Applicant	Mortgage or Home Loan Debt	Admitted	—	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.d	Applicant disclosed on his SCA the debt alleged in SOR ¶ 1.d (balance $52,033, past due $37,481). He disclosed that he was working with his attorney and the mortgage company to attempt a short sale or deed-in-lieu to resolve it. $52,033	Against Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.e	Applicant disclosed on his SCA a credit card debt ($24,831) and that he had reached a settlement agreement with the creditor to pay 45% of the debt. He was required to make monthly payments of $100 from May 2016 to March 2017 and a lump sum payment of $10,176 in November 2016. In his SCA, he indicated he was current with the payments. $24,831	Against Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Settlement

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

Applicant disclosed in his SCA the mortgage debt alleged in SOR ¶ 1.a ($71,290, past due $17,058). He indicated that he and his attorney were negotiating with the mortgage company on a possible short sale or deed-in-lieu to resolve the debt.

$71,290

Against Applicant

Mortgage or Home Loan Debt

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

1.b

Applicant stated in his answer for the debt in SOR ¶ 1.b that he could not obtain a loan modification and using a short sale was challenging, so the property was foreclosed in December 2014.

Against Applicant

Mortgage or Home Loan Debt

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

1.c

Applicant disclosed on his SCA a debt for a second mortgage ($78,375). This debt is reflected in SOR ¶ 1.c. He reached a payment plan with the lender to pay 40% of the debt. He was required to make a lump sum payment of $10,000 and monthly payments of $608 for four years with payments to begin in July 2015. He stated in his FORM response that the balance is now $48,308. He provided documentary proof that he has been making consistent payments on this debt as required.

$78,375

For Applicant

Mortgage or Home Loan Debt

Admitted

—

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

Documented

Debt Paid in Full

1.d

Applicant disclosed on his SCA the debt alleged in SOR ¶ 1.d (balance $52,033, past due $37,481). He disclosed that he was working with his attorney and the mortgage company to attempt a short sale or deed-in-lieu to resolve it.

$52,033

Against Applicant

Mortgage or Home Loan Debt

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

1.e

Applicant disclosed on his SCA a credit card debt ($24,831) and that he had reached a settlement agreement with the creditor to pay 45% of the debt. He was required to make monthly payments of $100 from May 2016 to March 2017 and a lump sum payment of $10,176 in November 2016. In his SCA, he indicated he was current with the payments.

$24,831

Against Applicant

Credit Card Debt

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

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

Documented

Debt Settlement

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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