Summary
The applicant, a 56-year-old customer service agent for a DOD contractor, faced trustworthiness concerns under Guideline F due to financial issues. Despite admitting to significant debt, the applicant demonstrated a good-faith effort to resolve her financial problems through debt management companies and direct negotiations with creditors. The judge granted eligibility for a public trust position, finding that the applicant's actions reflected responsibility and a commitment to financial stability.
Under Guideline F (Financial Considerations), the Statement of Reasons alleged the following: The $15,343 debt in allegation 1.a related to a credit card. Company 1 and Company 2 agreed to negotiate a settlement of this debt. The record evidence is unclear if either company negotiated a payment of this debt. Applicant and the creditor agreed to a resolution of the debt. The creditor agreed to cancel the debt and issued a 1099-C form for $12,859 on December 17, 2013. Applicant claimed this cancelled debt as income on her 2013 income tax returns. The $2,484 difference in the amount forgiven and the amount listed on the credit report is not explained. The difference could reflect some payments by the debt resolution companies or an incorrect amount on the credit report. This debt is resolved (1.a). SOR allegation 1.b ($9,610) is a debt held by a collection agency after being purchased from the original creditor. The debt is not paid or resolved. Company 2 agreed to resolve the first debt, which is still an open account with this Company. Company 1 told Applicant that it resolved the second debt, but did not provide her with any documentation showing payment of the debt. The credit reports show the debt as unresolved (1.b). SOR allegation 1.c ($5,277) belongs to a collection agency and relates to debt held by a bank. Company 1 included this debt ($4,334) in its list of debts to resolve for Applicant. She understood that Company 1 resolved this debt, but it did not provide her with any documentation showing that the debt was resolved and paid. The debt is listed as owed on the May 2015 credit report. Company 2 did not agree to resolve this debt (1.c). Applicant disputed the debt in SOR allegation 1.d ($1,710) as shown on the credit reports as she believed it was the same debt as in allegation 1.h, which has been resolved. A review of the credit reports revealed that the debts are not the same. Company 2 is working with the new credit collection agent holding this debt (1.d). SOR allegation 1.e ($1,041) is a debt held by a collection agency after being purchased from the original creditor. The debt is not paid or resolved. Company 2 agreed to resolve the first debt, which is still an open account with this Company. Company 1 told Applicant that it resolved the second debt, but did not provide her with any documentation showing payment of the debt. The credit reports show the debt as unresolved (1.e). SOR allegation 1.f ($3,637) relates to a banking debt held by the same creditor. Company 1 included this debt in its contract. Company 1 reached a resolution of the $3,637 in 2012. The debt was paid in May 2012. This debt is resolved (1.f). SOR allegation 1.g ($19,126) relates to a credit card debt held by the same creditor. Company 1 included this debt in its contract. Applicant resolved the larger debt in November 2014 with the creditor holding the debt. This debt is resolved (1.g). The final two SOR allegations concern a store credit card debt in allegation 1.h ($2,191). Although Company 1 included this debt in its plan, it did not resolve the debt. In 2014, the store creditor issued a 1099-C form, forgiving a debt of $1,717. Applicant claimed this debt as income on her 2014 income tax returns. This debt is unresolved (1.h). SOR allegation 1.i ($523) has recently been sold, and Company 2 is working with the new holder of the debt to resolve it (1.i). SOR allegation 1.j ($4,271) is a bank credit card debt. Applicant independently negotiated a settlement of the bank credit card debt with the law firm representing the creditor holding the debt. Applicant paid the negotiated amount in settlement of the debt in May 2015. This debt is resolved (1.j).
The judge granted the clearance. The government raised disqualifying conditions AG ¶ 19(a), AG ¶ 19(c), AG ¶ 19(e). The judge applied mitigating conditions AG ¶ 20(c), AG ¶ 20(d), AG ¶ 20(e). The decision turned on the following: The applicant demonstrated a good-faith effort to resolve her debts through debt management companies; She successfully negotiated settlements with creditors, resulting in the resolution of several debts; The applicant's financial issues were not due to a lack of responsibility, but rather a long-term accumulation of debt that she actively sought to manage.
Why the Applicant Prevailed
- The applicant demonstrated a good-faith effort to resolve her debts through debt management companies.
- She successfully negotiated settlements with creditors, resulting in the resolution of several debts.
- The applicant's financial issues were not due to a lack of responsibility, but rather a long-term accumulation of debt that she actively sought to manage.
Conditions Referenced
- AG ¶ 19(a)raisedInability or Unwillingness to Satisfy Debts
- AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations
- AG ¶ 19(e)raisedConsistent Spending Beyond One's Means
- AG ¶ 20(c)appliedReceived or Receiving Counseling for the Problem
- AG ¶ 20(d)appliedInitiated a Good-faith Effort to Repay Overdue Creditors
- AG ¶ 20(e)appliedReasonable Basis to Dispute the Legitimacy of the Past-due Debt
Key Rule Quoted
“The administrative judge’s over-arching adjudicative goal is a fair, impartial, and commonsense decision.”
Procedural Posture
- SOR issuedOct 28, 2014
- Answer filedNov 17, 2014
- Hearing heldMay 14, 2015
- Decision dateAug 19, 2015
Cite For
- Good-faith Efforts to Resolve Financial Issues Under Guideline F
- Application of Mitigating Conditions in Financial Cases
- Consideration of the Whole-person Concept in Trustworthiness Determinations