ISCR Case 15-07003.h1

Case Headnote

ISCR Case No. 15-07003.h1

grantedJun 23, 2017· Hon. Philip S. Howe· hearing

Summary

A 51-year-old staff accountant for a defense contractor was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The applicant faced allegations regarding 14 delinquent debts totaling $65,665. These included a 2012 medical bill for $1,036, an apartment lease debt of $456, and a $194 debt to a television service provider, all of which were paid in April 2017.

Significant debts were also resolved, such as a $7,456 auto loan that was charged off by the bank in 2016, and a $715 university judgment from 2008. The most substantial issue involved a $54,208.07 IRS tax liability from a former employer, which the applicant resolved through wage garnishment, an installment agreement, and an offer in compromise, including an $8,000 loan from his 401(k) and a personal gift.

While some smaller medical debts and an auto insurance debt remained unpaid, the applicant demonstrated substantial efforts to resolve his financial issues, including establishing a savings plan. The decision to grant the clearance was based on the resolution of six significant debts totaling $64,065, the finding that many difficulties stemmed from circumstances beyond his control, and a positive character reference from his current employer.

Why the Applicant Prevailed

The applicant resolved six significant debts totaling $64,065, demonstrating a good-faith effort to manage his financial obligations.
The applicant's financial difficulties were largely due to circumstances beyond his control, specifically a payroll tax issue with a former employer.
The applicant's current employer provided a positive character reference, supporting his reliability and 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
F.1.fraisedFailure to File or Fraudulently Filing Annual Federal, State, or Local Income Tax Returns or Failure to Pay Annual Federal, State, or Local Income Tax as Required

Mitigating

F.2.bappliedThe Conditions That Resulted in the Financial Problem Were Largely Beyond the Person's Control
F.2.cappliedThe Person Has Received or Is Receiving Counseling for the Problem And/or There Are Clear Indications That the Problem Is Being Resolved or Is Under Control
F.2.dappliedThe Individual Initiated and Is Adhering to a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts
F.2.eappliedThe Individual Has a Reasonable Basis to Dispute the Legitimacy of the Past-due Debt Which Is the Cause of the Problem
F.2.gappliedThe Individual Has Made Arrangements with the Appropriate Tax Authority to File or Pay the Amount Owed and Is in Compliance with These Arrangements

Key Rule Quoted

“The protection of the national security is the paramount consideration.”

Procedural Posture

SOR issuedApr 8, 2016
Answer filedJun 21, 2016Applicant requested a decision on the written record.
Hearing heldMar 17, 2017Hearing was convened as scheduled.
Decision dateJun 23, 2017

Cite For

Mitigation of Financial Issues Under Guideline F
Consideration of Circumstances Beyond the Applicant's Control
Good-faith Efforts to Resolve Debts as a Mitigating Factor

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 owed $1,036 to a medical provider for a hospitalization he had in 2012. This amount was unpaid at the time of the hearing, but in April 2017 Applicant paid this debt. It is resolved. $1,036	For Applicant	Medical Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	Documented Debt Paid in Full
1.b	Applicant owed an apartment landlord $456 on a lease. At the hearing the debt was unpaid, but in April 2017 Applicant paid the debt. It is resolved. $456	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts (g) arrangements made with the tax authority; in compliance	Documented Debt Paid in Full
1.c	Applicant has not paid the remaining four medical debts listed in the SOR. They are for $181. $181	Against Applicant	Medical Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	Applicant has not paid the remaining four medical debts listed in the SOR. They are for $130. $130	Against Applicant	Medical Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	Applicant has not paid the remaining four medical debts listed in the SOR. They are for $83. $83	Against Applicant	Medical Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	Applicant has not paid the remaining four medical debts listed in the SOR. They are for $62. $62	Against Applicant	Medical Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	Applicant disputes the cable television debt for $61 because he has that company’s service now. The company told him he owed money when he sought the installation of their service in his present residence and he claims he paid it in November 2013. This debt appears on the credit report of August 2015 but no other credit report marked as an exhibit. Applicant testified he could provide a statement showing the account was paid but did not do so. This debt is in dispute and it is not clear that it is resolved in any manner. $61	Against Applicant	Utility or Phone Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(e) reasonable, documented basis to dispute the debt	Claimed Debt Disputed with Creditor
1.h	Applicant owes a bank $7,456 on an auto loan. This car was repossessed in October 2012 after Applicant stopped paying on the loan. He testified he defaulted on his student loans and worked to rehabilitate it. He used the money he could have paid on the car for the student loan. The car loan was then delinquent. The bank charged off the auto loan and sent Applicant an Internal Revenue Service (IRS) Form 1099-C (Cancellation of Debt form) for the tax year 2016 in the amount of $5,811.16. This debt is resolved by this method. Applicant does not now own a car because he cannot afford to do so. He uses public transportation. $7,456	For Applicant	Auto Loan Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (g) arrangements made with the tax authority; in compliance	Documented Debt Paid in Full
1.i	Applicant worked for a mortgage broker from 2002 until he resigned from that company in 2004. The business was failing. Applicant was the accountant and comptroller of the company. He filed the payroll tax documents quarterly in 2002 and 2003, but the business owner did not provide the funds with which to pay the taxes. Applicant was notified in May 2005 by the IRS that he was being held responsible for the unpaid taxes. The IRS garnished his wages in 2006 to pay the $54,208.07 tax liability. It filed a lien against Applicant. Applicant retained an attorney and had the garnishment lifted in return for an installment payment agreement of $300 monthly to the IRS. Applicant paid that amount for about 84 months, totaling $25,200. He then submitted an offer in compromise to the IRS to pay another $16,115. He took out a loan from his Section 401(k) retirement account of $8,000 to pay that compromise amount. The monthly repayment is $172 for another 18 months. The balance owed he received from his personal representative as a personal gift. That amount was accepted by the IRS and a release issued. Applicant no longer owes this debt. It is resolved. $54,208	For Applicant	Tax Unpaid	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (g) arrangements made with the tax authority; in compliance	Documented Debt Paid in Full
1.j	Applicant has a judgment against him by a university from 2008 for $715. He denied that debt. He claims he paid it in 2008 when the school threatened to garnish his wages. This judgment debt appears on the December 2014 credit report as unpaid, but not on any subsequent credit report. Based on the totality of the evidence, this debt is resolved. $715	For Applicant	Judgment Against Applicant	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	Claimed Debt Paid in Full
1.k	Applicant owes $933 on a medical debt. Applicant admits it is unpaid. It appears on the December 2014 credit report but no subsequent credit reports. It dates from 2012, the time Applicant was hospitalized. This debt is not resolved. $933	Against Applicant	Medical Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.l	Applicant owes $194 on another television service provider. This debt was unpaid at the time of the hearing. Applicant submitted an exhibit after the hearing showing he paid $193.52 on April 14, 2017. This debt is resolved. $194	For Applicant	Utility or Phone Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (g) arrangements made with the tax authority; in compliance	Documented Debt Paid in Full
1.m	Applicant owes an auto insurance company $100 for insurance on his repossessed automobile. This debt is unpaid. He has not contacted the creditor. $100	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.n	The final SOR debt is for $50 on a medical debt dating from 2008. This debt is unpaid. $50	Against Applicant	Medical Debt	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

Applicant owed $1,036 to a medical provider for a hospitalization he had in 2012. This amount was unpaid at the time of the hearing, but in April 2017 Applicant paid this debt. It is resolved.

$1,036

For Applicant

Medical Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

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

(g) arrangements made with the tax authority; in compliance

Documented

Debt Paid in Full

1.b

Applicant owed an apartment landlord $456 on a lease. At the hearing the debt was unpaid, but in April 2017 Applicant paid the debt. It is resolved.

$456

For Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

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

(g) arrangements made with the tax authority; in compliance

Documented

Debt Paid in Full

1.c

Applicant has not paid the remaining four medical debts listed in the SOR. They are for $181.

$181

Against Applicant

Medical Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.d

Applicant has not paid the remaining four medical debts listed in the SOR. They are for $130.

$130

Against Applicant

Medical Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.e

Applicant has not paid the remaining four medical debts listed in the SOR. They are for $83.

$83

Against Applicant

Medical Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.f

Applicant has not paid the remaining four medical debts listed in the SOR. They are for $62.

$62

Against Applicant

Medical Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.g

Applicant disputes the cable television debt for $61 because he has that company’s service now. The company told him he owed money when he sought the installation of their service in his present residence and he claims he paid it in November 2013. This debt appears on the credit report of August 2015 but no other credit report marked as an exhibit. Applicant testified he could provide a statement showing the account was paid but did not do so. This debt is in dispute and it is not clear that it is resolved in any manner.

$61

Against Applicant

Utility or Phone Debt

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(e) reasonable, documented basis to dispute the debt

Claimed

Debt Disputed with Creditor

1.h

Applicant owes a bank $7,456 on an auto loan. This car was repossessed in October 2012 after Applicant stopped paying on the loan. He testified he defaulted on his student loans and worked to rehabilitate it. He used the money he could have paid on the car for the student loan. The car loan was then delinquent. The bank charged off the auto loan and sent Applicant an Internal Revenue Service (IRS) Form 1099-C (Cancellation of Debt form) for the tax year 2016 in the amount of $5,811.16. This debt is resolved by this method. Applicant does not now own a car because he cannot afford to do so. He uses public transportation.

$7,456

For Applicant

Auto Loan Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(g) arrangements made with the tax authority; in compliance

Documented

Debt Paid in Full

1.i

Applicant worked for a mortgage broker from 2002 until he resigned from that company in 2004. The business was failing. Applicant was the accountant and comptroller of the company. He filed the payroll tax documents quarterly in 2002 and 2003, but the business owner did not provide the funds with which to pay the taxes. Applicant was notified in May 2005 by the IRS that he was being held responsible for the unpaid taxes. The IRS garnished his wages in 2006 to pay the $54,208.07 tax liability. It filed a lien against Applicant. Applicant retained an attorney and had the garnishment lifted in return for an installment payment agreement of $300 monthly to the IRS. Applicant paid that amount for about 84 months, totaling $25,200. He then submitted an offer in compromise to the IRS to pay another $16,115. He took out a loan from his Section 401(k) retirement account of $8,000 to pay that compromise amount. The monthly repayment is $172 for another 18 months. The balance owed he received from his personal representative as a personal gift. That amount was accepted by the IRS and a release issued. Applicant no longer owes this debt. It is resolved.

$54,208

For Applicant

Tax Unpaid

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(g) arrangements made with the tax authority; in compliance

Documented

Debt Paid in Full

1.j

Applicant has a judgment against him by a university from 2008 for $715. He denied that debt. He claims he paid it in 2008 when the school threatened to garnish his wages. This judgment debt appears on the December 2014 credit report as unpaid, but not on any subsequent credit report. Based on the totality of the evidence, this debt is resolved.

$715

For Applicant

Judgment Against Applicant

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

Claimed

Debt Paid in Full

1.k

Applicant owes $933 on a medical debt. Applicant admits it is unpaid. It appears on the December 2014 credit report but no subsequent credit reports. It dates from 2012, the time Applicant was hospitalized. This debt is not resolved.

$933

Against Applicant

Medical Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.l

Applicant owes $194 on another television service provider. This debt was unpaid at the time of the hearing. Applicant submitted an exhibit after the hearing showing he paid $193.52 on April 14, 2017. This debt is resolved.

$194

For Applicant

Utility or Phone Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

(b) conditions largely beyond the person’s control; acted responsibly

(g) arrangements made with the tax authority; in compliance

Documented

Debt Paid in Full

1.m

Applicant owes an auto insurance company $100 for insurance on his repossessed automobile. This debt is unpaid. He has not contacted the creditor.

$100

Against Applicant

Unspecified Financial

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.n

The final SOR debt is for $50 on a medical debt dating from 2008. This debt is unpaid.

$50

Against Applicant

Medical Debt

Unknown

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

Loading case…

Summary

Why the Applicant Prevailed

Conditions Referenced

Key Rule Quoted

Procedural Posture

Cite For

Full decision