ISCR Case 15-02328.h1

Case Headnote

ISCR Case No. 15-02328.h1

grantedApr 12, 2017· Hon. Robert Robinson Gales· hearing

Summary

A 51-year-old defense contractor and retired U.S. Navy E-6 was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The applicant faced financial difficulties following his mandatory retirement, leading to several delinquent accounts.

Specifically, a home mortgage, which was past due and in foreclosure in 2012, was brought current through a modification process and was reported as current by July 2016. A $19 dental co-pay, placed for collection in 2012, was paid by his wife upon learning of the delinquency. An HOA judgment for $1,738 from September 2011 was paid via wage garnishment by June 2012. A bank credit card account with a $4,546 balance, initially believed to be his, was determined to belong to his deceased father and was removed from his credit report.

Additionally, a warehouse club charge card account, with a reported high credit of $797 and a $1,520 past-due balance, was settled for $600 in July and August 2016. A home improvement store charge card account, with a reported high credit of $533 and a $1,017 past-due balance, was disputed and removed from his credit report. Finally, an unspecified bank account with a $1,282 unpaid balance was settled for $720 in August 2016. The judge found that the applicant successfully mitigated these concerns by demonstrating significant efforts to resolve his debts and improve his financial situation, including proactive steps like credit counseling and loan modifications, and resolving all identified delinquent accounts prior to the hearing.

Why the Applicant Prevailed

The applicant took proactive steps to address his financial issues, including obtaining credit counseling and loan modifications.
He resolved all identified delinquent accounts prior to the hearing, demonstrating financial responsibility.
The applicant's positive work performance and character references supported his trustworthiness.

Conditions Referenced

Disqualifying

F.3raisedInability to Satisfy Debts
F.4raisedDeliberately Misrepresenting or Failing to Disclose Facts

Mitigating

F.2appliedThe Conditions That Resulted in the Financial Difficulties Were Largely Beyond the Applicant's Control
F.3appliedThe Applicant Has Taken Significant Steps to Address His Financial Situation
F.4appliedThe Applicant Has Demonstrated a Good Faith Effort to Resolve His Debts

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.”
— AG ¶ 18

Procedural Posture

SOR issuedOct 31, 2015
Answer filedDec 1, 2015Applicant elected to have the case decided on the written record.
Hearing heldJul 13, 2016Hearing was convened as scheduled.
Decision dateApr 12, 2017

Cite For

Mitigation of Financial Concerns Under Guideline F
Demonstrating Good Faith Efforts to Resolve Debts
Impact of Personal Circumstances on Financial Stability

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 home mortgage with a high credit of $221,154 and a remaining balance of $217,601, of which $9,271 was reported as past due and in foreclosure as of November 2012. The February 2015 credit report reported a different scenario, reflecting a remaining balance of $224,286, of which $3,422 was reported as past due. In fact, commencing in 2012, working with the lender and a lender subsidiary, Applicant started the mortgage modification process, making the required monthly payments. The mortgage was eventually brought into a current status. Applicant’s April 2016 loan account statement reflects no delinquency. His July 2016 credit report reports the account is current, and has been for the past seven months. The account has been resolved. $217,601	For Applicant	Mortgage or Home Loan Debt	Denied	—	—	—
1.b	This is a dental account with an unpaid co-pay balance of $19 that was placed for collection in 2012. Applicant’s wife was unaware that there was a delinquent co-pay, and she was under the impression that her dental insurance had covered the charges. She did not recall receiving any notices. When she first learned of the delinquency “a few years ago,” she paid it. The collection agent reported that the creditor had closed the account. The account is not reported in his July 2016 credit report. The account has been resolved. $19	For Applicant	Unspecified Financial	Denied	—	—	—
1.c	This is the HOA account from which Applicant withheld his $182 annual HOA dues. The HOA sued him and obtained a $1,738 judgment against him in September 2011. Applicant paid the judgment through a garnishment of his wages on June 12, 2012, nearly three and one-half years before the SOR was issued. The account has been resolved. $1,738	For Applicant	Judgment Against Applicant	Denied	—	—	—
1.d	This is a bank credit card account with $2,000 credit limit and unpaid and past-due balance of $4,546 that was placed for collection in 2012. Applicant learned about the account during his loan modification process, and he was initially under the impression that it was his account so he reported it in his e-QIP. He subsequently determined that the account belonged to his father who had passed away in 2011. Applicant and his father had the same names with different suffixes and a different spelling of their first names. Using an address listed in his credit report, Applicant initially sought to validate the account with a collection agent, but his correspondence was returned to him as not deliverable. He subsequently contacted the creditor to dispute the account and furnished certain requested information. Based on the information provided, the creditor researched the account and determined that the information in Applicant’s credit report was incorrect. The creditor removed the account from Applicant’s credit report. The account has been resolved. $4,546	For Applicant	Credit Card Debt	Denied	—	—	—
1.e	This is a bank-issued warehouse club charge card account with a $500 credit limit and unspecified unpaid and past-due balances that was placed for collection and sold to a debt purchaser. The debt purchaser, referring to itself as a factoring company, reported that the high credit was $797 and the unpaid and past-due balance was $1,520. Using an address listed in his credit report, Applicant sought to validate the account with the debt purchaser, but his correspondence was returned to him as not deliverable. Applicant is unable to confirm that the account belonged to him and not to his father, and he had no further way to address the account in an effort to resolve it. However, he was eventually able to track the account through one collection agent to another collection agent, and in July 2016, the account was settled for the reduced amount of $600. Applicant made the first $300 payment on July 25, 2016, and the second and final $300 payment on August 1, 2016. The account has been resolved. $1,520	For Applicant	Credit Card Debt	Denied	—	—	—
1.f	This is a bank-issued home improvement store charge card account with a $300 credit limit and unspecified unpaid and past-due balances that was placed for collection and sold to the same debt purchaser as above. The debt purchaser, again referring to itself as a factoring company, reported that the high credit was $533 and the unpaid and past-due balance was $1,017. Using an address listed in his credit report, Applicant sought to validate the account with the debt purchaser, but his correspondence was returned to him as not deliverable. Applicant is unable to confirm that the account belonged to him and not to his father, and he had no further way to address the account in an effort to resolve it. However, he was eventually able to track the account to another collection agent. He disputed the account and furnished certain requested information. Based on the information provided, the collection agent researched the account and determined that the information in Applicant’s credit report was incorrect. The collection agent removed the account from Applicant’s credit report. The account has been resolved. $1,017	For Applicant	Credit Card Debt	Denied	—	—	—
1.g	This is an unspecified type of bank account with an unpaid balance of $1,282 that was placed for collection and sold to a debt purchaser. Applicant wrote the collection agent seeking validation of the account. In August 2016, the account was settled for the reduced amount of $720. Applicant made that payment on August 2, 2016. The account has been resolved. $1,282	For Applicant	Unspecified Financial	Denied	—	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

This is a home mortgage with a high credit of $221,154 and a remaining balance of $217,601, of which $9,271 was reported as past due and in foreclosure as of November 2012. The February 2015 credit report reported a different scenario, reflecting a remaining balance of $224,286, of which $3,422 was reported as past due. In fact, commencing in 2012, working with the lender and a lender subsidiary, Applicant started the mortgage modification process, making the required monthly payments. The mortgage was eventually brought into a current status. Applicant’s April 2016 loan account statement reflects no delinquency. His July 2016 credit report reports the account is current, and has been for the past seven months. The account has been resolved.

$217,601

For Applicant

Mortgage or Home Loan Debt

Denied

—

1.b

This is a dental account with an unpaid co-pay balance of $19 that was placed for collection in 2012. Applicant’s wife was unaware that there was a delinquent co-pay, and she was under the impression that her dental insurance had covered the charges. She did not recall receiving any notices. When she first learned of the delinquency “a few years ago,” she paid it. The collection agent reported that the creditor had closed the account. The account is not reported in his July 2016 credit report. The account has been resolved.

$19

For Applicant

Unspecified Financial

Denied

—

1.c

This is the HOA account from which Applicant withheld his $182 annual HOA dues. The HOA sued him and obtained a $1,738 judgment against him in September 2011. Applicant paid the judgment through a garnishment of his wages on June 12, 2012, nearly three and one-half years before the SOR was issued. The account has been resolved.

$1,738

For Applicant

Judgment Against Applicant

Denied

—

1.d

This is a bank credit card account with $2,000 credit limit and unpaid and past-due balance of $4,546 that was placed for collection in 2012. Applicant learned about the account during his loan modification process, and he was initially under the impression that it was his account so he reported it in his e-QIP. He subsequently determined that the account belonged to his father who had passed away in 2011. Applicant and his father had the same names with different suffixes and a different spelling of their first names. Using an address listed in his credit report, Applicant initially sought to validate the account with a collection agent, but his correspondence was returned to him as not deliverable. He subsequently contacted the creditor to dispute the account and furnished certain requested information. Based on the information provided, the creditor researched the account and determined that the information in Applicant’s credit report was incorrect. The creditor removed the account from Applicant’s credit report. The account has been resolved.

$4,546

For Applicant

Credit Card Debt

Denied

—

1.e

This is a bank-issued warehouse club charge card account with a $500 credit limit and unspecified unpaid and past-due balances that was placed for collection and sold to a debt purchaser. The debt purchaser, referring to itself as a factoring company, reported that the high credit was $797 and the unpaid and past-due balance was $1,520. Using an address listed in his credit report, Applicant sought to validate the account with the debt purchaser, but his correspondence was returned to him as not deliverable. Applicant is unable to confirm that the account belonged to him and not to his father, and he had no further way to address the account in an effort to resolve it. However, he was eventually able to track the account through one collection agent to another collection agent, and in July 2016, the account was settled for the reduced amount of $600. Applicant made the first $300 payment on July 25, 2016, and the second and final $300 payment on August 1, 2016. The account has been resolved.

$1,520

For Applicant

Credit Card Debt

Denied

—

1.f

This is a bank-issued home improvement store charge card account with a $300 credit limit and unspecified unpaid and past-due balances that was placed for collection and sold to the same debt purchaser as above. The debt purchaser, again referring to itself as a factoring company, reported that the high credit was $533 and the unpaid and past-due balance was $1,017. Using an address listed in his credit report, Applicant sought to validate the account with the debt purchaser, but his correspondence was returned to him as not deliverable. Applicant is unable to confirm that the account belonged to him and not to his father, and he had no further way to address the account in an effort to resolve it. However, he was eventually able to track the account to another collection agent. He disputed the account and furnished certain requested information. Based on the information provided, the collection agent researched the account and determined that the information in Applicant’s credit report was incorrect. The collection agent removed the account from Applicant’s credit report. The account has been resolved.

$1,017

For Applicant

Credit Card Debt

Denied

—

1.g

This is an unspecified type of bank account with an unpaid balance of $1,282 that was placed for collection and sold to a debt purchaser. Applicant wrote the collection agent seeking validation of the account. In August 2016, the account was settled for the reduced amount of $720. Applicant made that payment on August 2, 2016. The account has been resolved.

$1,282

For Applicant

Unspecified Financial

Denied

—

Loading case…

Case Profile

Summary

Why the Applicant Prevailed

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