Summary
A 44-year-old defense contractor employee was denied a security clearance due to significant financial concerns under Guideline F. The applicant had accumulated over $304,000 in delinquent debts, including federal and state tax liens, which largely stemmed from an unsuccessful self-employment venture as a consultant between 2000 and 2005 after a layoff.
The applicant filed for Chapter 13 bankruptcy in 2007, making payments for several months before being laid off in June 2008. Unable to continue payments, the bankruptcy case was dismissed in August 2008 for failure to file information. Although he obtained new employment shortly after, his credit report in June 2009 still showed a $170,000 outstanding balance on a foreclosed mortgage loan, despite his claim that the balance was significantly lower.
A second Chapter 13 bankruptcy petition was filed in July 2009, listing debts totaling $225,384, including substantial federal and state tax claims. While a payment plan was established and confirmed in November 2009, with payments to be made directly by his employer, the applicant ultimately failed to demonstrate ongoing solvency or a realistic plan to address his overall financial obligations, leading to the denial of his security clearance.
Why the Applicant Was Denied
- Applicant incurred significant delinquent debts totaling $304,663, including federal and state tax liens.
- He filed for Chapter 13 bankruptcy in 2007, which was dismissed for non-compliance with plan requirements.
- Applicant's second Chapter 13 bankruptcy filing did not provide evidence of ongoing solvency or a realistic plan to repay debts.
Conditions Referenced
- AG ¶ 19(a)appliedInability or Unwillingness to Satisfy Debts
- AG ¶ 19(c)appliedA History of Not Meeting Financial Obligations
- AG ¶ 19(e)appliedConsistent Spending Beyond One’s Means
- AG ¶ 20(a)rejectedBehavior Happened so Long Ago, Was so Infrequent, or Occurred Under Such Circumstances That It Is Unlikely to RecurApplicant's financial irresponsibility is recent and involves large sums.
- AG ¶ 20(b)rejectedConditions That Resulted in the Financial Problem Were Largely Beyond the Person’s ControlApplicant chose to pursue self-employment despite financial risks.
- AG ¶ 20(c)rejectedReceived Counseling for the Problem And/or Clear Indications That the Problem Is Being ResolvedInsufficient evidence of current solvency or resolution of debts.
- AG ¶ 20(d)rejectedInitiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsFailure to demonstrate a good-faith effort to address financial obligations.
Key Rule Quoted
“Failure or inability 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 information.”
Procedural Posture
- SOR issuedMar 30, 2009
- Answer filedJul 20, 2009Applicant requested decision on the written record.
- Hearing held—No hearing; case decided on the written record.
- Decision dateDec 17, 2009
Cite For
- Denial of Security Clearance Due to Significant Financial Irresponsibility Under Guideline F
- Failure to Demonstrate Ongoing Solvency in Bankruptcy Proceedings
- Insufficient Evidence of Good-faith Efforts to Resolve Financial Obligations