ISCR Case 15-07368.h1

Case Headnote

ISCR Case No. 15-07368.h1

grantedAug 17, 2017· Hon. Candace Le'i Garcia· hearing

Summary

A 51-year-old defense contractor and former military officer was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). The applicant's financial difficulties stemmed from business ownership and personal circumstances, leading to a history of delinquent debts. However, the applicant demonstrated significant efforts to resolve these issues.

Specifically, the applicant successfully negotiated a credit card balance to $6,273 and paid it off by March 2017. For a rental property, the primary and secondary mortgages, which had fallen behind in 2012, were made current by July 2017 after a loan modification was approved for the primary mortgage in late 2014. Additionally, a department store charge account was paid in July 2016, and a car loan was paid in April 2016.

Regarding a March 2015 lien for delinquent state personal income taxes from 2011, the applicant was unaware of the lien until receiving the Statement of Reasons, discovering an issue with auto-deducted payments. Since March 2015, timely payments of $250 have been made, with 17 payments documented from January 2016 to June 2017, and the lien is expected to be resolved within six months. The applicant provided evidence of financial counseling, a budget, and good-faith efforts to resolve all debts, with many issues attributed to circumstances beyond her control.

Why the Applicant Prevailed

The applicant provided evidence of financial counseling and a budget to manage debts.
The applicant made good-faith efforts to resolve delinquent debts, including paying off several accounts.
The applicant's financial issues were largely due to circumstances beyond her control, including business challenges and personal hardships.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations
AG ¶ 19(f)raisedFailure 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

AG ¶ 20(a)appliedThe Behavior Happened so Long Ago, Was so Infrequent, or Occurred Under Such Circumstances That It Is Unlikely to Recur and Does Not Cast Doubt on the Individual’s Current Reliability, Trustworthiness, or Good Judgment
AG ¶ 20(b)appliedThe Conditions That Resulted in the Financial Problem Were Largely Beyond the Person's Control
AG ¶ 20(c)appliedThe Individual Has Received or Is Receiving Financial Counseling for the Problem From a Legitimate and Credible Source
AG ¶ 20(d)appliedThe Individual Initiated and Is Adhering to a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts
AG ¶ 20(g)appliedThe Individual Has Made Arrangements with the Appropriate Tax Authority to File or Pay the Amount Owed and Is in Compliance with Those Arrangements

Key Rule Quoted

“A security clearance adjudication is an evaluation of an individual’s judgment, reliability, and trustworthiness. It is not a debt-collection procedure.”
— ISCR Case No. 09-02160 (App. Bd. Jun. 21, 2010)

Procedural Posture

SOR issuedMay 10, 2016
Answer filedAug 1, 2016
Hearing heldJun 14, 2017
Decision dateAug 17, 2017

Cite For

Mitigation of Financial Considerations Under Guideline F
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–1.b	2 sub-charges — specific text not stated in this decision (for the applicant).	For Applicant			—	—	—
1.c	SOR ¶ 1.c is a credit card. When Applicant fell behind on this account, she made small payments as a showing of good faith. She successfully negotiated the delinquent balance to $6,273 prior to receiving the SOR, and she paid $522 monthly since 2016 to resolve the debt. She provided documentation to corroborate her testimony regarding her payment arrangement, and to show that she paid off the account as of March 2017. $6,273	For Applicant	Credit Card Debt	Admitted	—	—	—
1.d	SOR ¶ 1.d is the primary mortgage and SOR ¶ 1.g is the secondary mortgage for Applicant’s rental property. As with SOR ¶ 1.b, Applicant and her husband sought a loan modification for SOR ¶¶ 1.d and 1.g when they began falling behind on their payments in 2012. She stated that they were approved for a loan modification for SOR ¶ 1.d in late 2014. She provided documentation to corroborate her testimony concerning her efforts to obtain a loan modification for SOR ¶ 1.d, to show that SOR ¶ 1.g has been current since at least July 2016, and to show that SOR ¶¶ 1.d and 1.g are current as of July 2017. Applicant stated that they have had tenants in the rental property for the past three years who have timely paid their rent. While Applicant and her husband have also been unable to sell this property without taking a significant financial loss due to a loss of equity, it is their intent to sell it.	For Applicant	Mortgage or Home Loan Debt	Admitted	—	—	—
1.e	SOR ¶ 1.e is a department store charge account. Applicant stated that she started paying this debt before she received the SOR. She provided documentation to show that she paid it in July 2016.	For Applicant	Credit Card Debt	Admitted	—	—	—
1.f	SOR ¶ 1.f is a car loan. Applicant stated that she had been attempting to settle this debt before she received the SOR. She provided documentation to show that she paid this debt in April 2016.	For Applicant	Auto Loan Debt	Admitted	—	—	—
1.g	specific text not stated in this decision	For Applicant	Unspecified Financial	Unknown	—	—	—
1.h	SOR ¶ 1.h is a March 2015 lien entered against Applicant for delinquent state personal income taxes for tax period 2011. Applicant stated that when she and her husband received notification in 2015 concerning their delinquent taxes, she thought they had already set up a payment plan for the outstanding taxes, and she was unaware that a lien had been placed against them until she received the SOR. When she contacted the state tax office to set up another payment plan, she learned that the account they had previously set up for their initial payment plan was not auto deducting the payments. She also discussed with the state tax office the potential for resolving this lien through an offer in compromise, though Applicant understands that she has to be in the financial position to pay should she proceed that route. She stated that they have made timely payments towards this lien since March 2015, and they expect to have the lien resolved within six months. She provided documentation to show that they made 17 payments of $250 from January 2016 to June 2017.	For Applicant	Tax Unpaid	Admitted	—	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a–1.b

2 sub-charges — specific text not stated in this decision (for the applicant).

For Applicant

—

1.c

SOR ¶ 1.c is a credit card. When Applicant fell behind on this account, she made small payments as a showing of good faith. She successfully negotiated the delinquent balance to $6,273 prior to receiving the SOR, and she paid $522 monthly since 2016 to resolve the debt. She provided documentation to corroborate her testimony regarding her payment arrangement, and to show that she paid off the account as of March 2017.

$6,273

For Applicant

Credit Card Debt

Admitted

—

1.d

SOR ¶ 1.d is the primary mortgage and SOR ¶ 1.g is the secondary mortgage for Applicant’s rental property. As with SOR ¶ 1.b, Applicant and her husband sought a loan modification for SOR ¶¶ 1.d and 1.g when they began falling behind on their payments in 2012. She stated that they were approved for a loan modification for SOR ¶ 1.d in late 2014. She provided documentation to corroborate her testimony concerning her efforts to obtain a loan modification for SOR ¶ 1.d, to show that SOR ¶ 1.g has been current since at least July 2016, and to show that SOR ¶¶ 1.d and 1.g are current as of July 2017. Applicant stated that they have had tenants in the rental property for the past three years who have timely paid their rent. While Applicant and her husband have also been unable to sell this property without taking a significant financial loss due to a loss of equity, it is their intent to sell it.

For Applicant

Mortgage or Home Loan Debt

Admitted

—

1.e

SOR ¶ 1.e is a department store charge account. Applicant stated that she started paying this debt before she received the SOR. She provided documentation to show that she paid it in July 2016.

For Applicant

Credit Card Debt

Admitted

—

1.f

SOR ¶ 1.f is a car loan. Applicant stated that she had been attempting to settle this debt before she received the SOR. She provided documentation to show that she paid this debt in April 2016.

For Applicant

Auto Loan Debt

Admitted

—

1.g

specific text not stated in this decision

For Applicant

Unspecified Financial

Unknown

—

1.h

SOR ¶ 1.h is a March 2015 lien entered against Applicant for delinquent state personal income taxes for tax period 2011. Applicant stated that when she and her husband received notification in 2015 concerning their delinquent taxes, she thought they had already set up a payment plan for the outstanding taxes, and she was unaware that a lien had been placed against them until she received the SOR. When she contacted the state tax office to set up another payment plan, she learned that the account they had previously set up for their initial payment plan was not auto deducting the payments. She also discussed with the state tax office the potential for resolving this lien through an offer in compromise, though Applicant understands that she has to be in the financial position to pay should she proceed that route. She stated that they have made timely payments towards this lien since March 2015, and they expect to have the lien resolved within six months. She provided documentation to show that they made 17 payments of $250 from January 2016 to June 2017.

For Applicant

Tax Unpaid

Admitted

—

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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