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Summary

The applicant, a 36-year-old consultant for a defense contractor, faced security clearance concerns under Guideline F due to financial difficulties stemming from a business downturn. He filed for Chapter 7 bankruptcy, which discharged most of his debts, and demonstrated responsible financial management post-bankruptcy. The judge found that the applicant had mitigated the financial concerns and granted the security clearance.

Under Guideline F (Financial Considerations), the Statement of Reasons alleged the following: Applicant filed for Chapter 7 on April 15, 2016. Most of the delinquent debts set forth in the SOR were included in the bankruptcy. A discharge was granted on July 19, 2016 (1.a). A delinquent auto loan account was charged off in the approximate amount of $13,932. Applicant asked the lien holder to pick up the truck as he could no longer afford it. It was sold at auction and the remaining balance is the deficiency that Applicant owed. Applicant filed for Chapter 7 bankruptcy on April 15, 2016, and this debt was discharged (1.b). A delinquent credit card account was placed for collection in the amount of $13,857. Applicant disputes the debt and it has not been validated as a legitimate debt. The Government’s credit reports do not list it (1.c). A delinquent student loan account was charged off in the approximate amount of $12,419. Applicant states that he has consolidated all of his student loans and currently owes approximately $34,700. He has filed for a deferment status based upon financial hardship for the past two years (1.d). A delinquent credit card account was placed for collection in the approximate amount of $12,000. The credit card was partially used for business purposes and the debt was discharged in the Chapter 7 bankruptcy filed on April 15, 2016 (1.e). A delinquent account was placed for collection in the approximate amount of $6,779. This was an equipment lease for the business that failed. The debt was discharged in the Chapter 7 bankruptcy filed on April 15, 2016 (1.f). A delinquent auto loan account was charged off in the approximate amount of $4,891. This was a work truck that one of the employees drove. Applicant asked the lien holder to pick it up, as he could no longer afford it. The debt was discharged in the Chapter 7 bankruptcy filed on April 15, 2016 (1.g). A delinquent credit card account was placed for collection in the approximate amount of $2,470. This debt was discharged in the Chapter 7 bankruptcy filed on April 15, 2016 (1.h). Delinquent Federal taxes were owed in the amount of $26,397 for tax year 2009; $12,373 for tax year 2010; and $1,730 for tax year 2011. Applicant claims the taxes were discharged in this Chapter 7 bankruptcy filed on April 15, 2016 (1.i).

The judge granted the clearance. The government raised disqualifying conditions 19.(a), 19.(c). The judge applied mitigating conditions 20.(b), 20.(c), 20.(d). The decision turned on the following: The applicant filed for Chapter 7 bankruptcy, discharging most of his debts; He demonstrated responsible financial management and budgeting after bankruptcy; Four witnesses testified to the applicant's good character and trustworthiness.

Why the Applicant Prevailed

• The applicant filed for Chapter 7 bankruptcy, discharging most of his debts.
• He demonstrated responsible financial management and budgeting after bankruptcy.
• Four witnesses testified to the applicant's good character and trustworthiness.

Conditions Referenced

Key Rule Quoted

“The adjudicative process is an examination of a sufficient period of a person’s life to make an affirmative determination that the person is an acceptable security risk.”

Procedural Posture

• SOR issuedJan 17, 2016
• Answer filedMar 24, 2016
• Hearing heldSep 14, 2016Record remained open until September 28, 2016.
• Decision dateFeb 3, 2017

Cite For

• Mitigation of Financial Issues Under Guideline F
• Impact of Bankruptcy on Security Clearance Eligibility
• Whole-person Assessment in Security Clearance Decisions