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ISCR Case 06-23665.h1 — CASE

ISCR Case 06-23665.h1granted

Case Headnote

ISCR Case No. 06-23665.h1

grantedJun 11, 2007· Hon. Joseph Testan· hearing

Summary

A 57-year-old U.S. Navy veteran and defense contractor was granted a security clearance despite past financial difficulties under Guideline F (Financial Considerations). The Statement of Reasons (SOR) cited two specific debts: approximately $5,971 owed to Citi Auto, charged off in September 2003, and approximately $4,179 owed to Ford Motor Credit, resulting from a 2001 judgment. These issues raised Disqualifying Conditions F.19(a) and F.19(c).

However, the applicant demonstrated significant mitigating factors. He had filed for Chapter 7 bankruptcy, which was discharged over two years prior to the clearance decision. He provided credible evidence that both debts listed in the SOR were included and discharged through this bankruptcy proceeding.

Since his bankruptcy discharge, the applicant has maintained financial responsibility, living within his means and incurring no new outstanding or delinquent debts. The decision highlighted the substantial time elapsed since his financial difficulties and his commitment to avoiding future problems, leading to the application of Mitigating Conditions F.20(a), F.20(b), and F.20(c), and ultimately, the granting of his clearance.

Why the Applicant Prevailed

The applicant's bankruptcy was discharged over two years ago, demonstrating a significant time lapse since financial difficulties.
He provided credible evidence that the debts listed in the SOR were discharged by the bankruptcy court.
The applicant has not been delinquent on any new debts since his discharge and is committed to avoiding future financial problems.

Conditions Referenced

Disqualifying

F.19(a)raisedInability or Unwillingness to Satisfy Debts
F.19(c)raisedA History of Not Meeting Financial Obligations

Mitigating

F.20(a)appliedThe Behavior Was Not Recent and the Applicant Has Demonstrated a Change in Circumstances
F.20(b)rejectedThe Applicant Has Received Counseling for the Problem and Has Made a Good Faith Effort to Repay Overdue Creditors
F.20(c)appliedThe Applicant Has a Reasonable Basis to Expect to Be Able to Satisfy Debts

Key Rule Quoted

“Once the Government established a prima facie case under Guideline F, the burden shifted to applicant to show he has reformed.”

Procedural Posture

SOR issuedJan 19, 2007
Answer filedFeb 6, 2007
Hearing held—Determined on a written record in lieu of a hearing.
Decision dateJun 11, 2007

Cite For

Demonstrating Financial Reform After Bankruptcy Under Guideline F
Credibility of Applicant's Statements Regarding Financial Responsibility
Time Elapsed Since Financial Difficulties 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.

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: Decision on RecordDecided: granted

The applicant faced financial difficulties that led to a Chapter 7 bankruptcy filing and discharge over two years ago. The judge found that the applicant had credible evidence of reform and had not incurred any new debts since the discharge, leading to a decision to grant the security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant was indebted to Citi Auto in the approximate amount of $5,971.00. The debt was charged off by the creditor in September 2003. $5,971	For Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	Applicant was indebted to Ford Motor Credit in the approximate amount of $4,179.00 as a result of a judgment it obtained against applicant in 2001. $4,179	For Applicant	Judgment Against Applicant	Unknown	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—

Descriptive standardized rendering of a decided public case (Guideline F). The verbatim source decision is shown in full below.

Full decision

The complete, official text — footnotes and signatures included — is in the original PDF.

Decision text, by section

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

SYNOPSIS

KEYWORD: Financial

DIGEST: Applicant’s financial difficulties, which resulted in a bankruptcy filing and discharge, occurred over two years ago. He is committed to avoiding a recurrence of these problems. Clearance is granted.

CASENO: 06-23665.h1

DATE: 06/11/2007

DATE: June 11, 2007

) ) In Re: ) ) ISCR Case No. 06-23665 ------------------------- ) SSN: ----------- ) ) Applicant for Security Clearance )

DECISION OF ADMINISTRATIVE JUDGE JOSEPH TESTAN

APPEARANCES

SYNOPSIS

Applicant’s financial difficulties, which resulted in a bankruptcy filing and discharge, occurred over two years ago. He is committed to avoiding a recurrence of these problems. Clearance is granted.

STATEMENT OF CASE

On January 19, 2007, the Defense Office of Hearings and Appeals (DOHA), pursuant to Executive Order 10865 and Department of Defense Directive 5220.6 (Directive), dated January 2, 1992, issued a Statement of Reasons (SOR) to applicant which detailed reasons why DOHA could not make the preliminary affirmative finding under the Directive that it is clearly consistent with the national interest to grant or continue a security clearance for applicant and recommended referral to an Administrative Judge to determine whether clearance should be denied or revoked.

Applicant responded to the SOR in writing on February 6 and February 20, 2007, and elected to have his case determined on a written record in lieu of a hearing. Department Counsel submitted the Government's written case (FORM) on or about March 7, 2007. Applicant did not file a response to the FORM. The case was assigned to me on May 2, 2007.

FINDINGS OF FACT

Applicant is a 57 year old employee of a defense contractor. He received an Honorable Discharge from the U.S. Navy after serving on active duty for over 20 years.

In June 2004, applicant filed a Chapter 7 bankruptcy petition. In December 2004, he received a Discharge from the bankruptcy court.

Applicant was indebted to Citi Auto in the approximate amount of $5,971.00. The debt was charged off by the creditor in September 2003. In his response to the SOR, applicant stated the debt was discharged by the bankruptcy court. This debt does not appear on the two most recent credit reports offered by the Government (Exhibits 7 and 8). I find that this debt was discharged by the bankruptcy court.

Applicant was indebted to Ford Motor Credit in the approximate amount of $4,179.00 as a result of a judgment it obtained against applicant in 2001. Although this judgment is listed on all three credit reports offered by the Government, I find applicant’s statement, that this debt was discharged by the bankruptcy court, to be credible and worthy of belief.

In his response to the SOR, applicant made the following statements:

Since our bankruptcy we have had no outstanding debts . . . we don’t have any credit cards and we pay cash for our purchases. We are living within our means and have no plans to do otherwise. Our bills include one vehicle payment, rent, insurance, and utilities, and one book club . . . We have only declared bankruptcy once and have since stayed out of debt.

I would like to add that we live modestly and simply without extra extravagances. We are happy this way and have no intention of changing our lifestyle. We have no outstanding debts, just normal living expenses, and we like it that way.

CONCLUSION

The evidence establishes that applicant has a history of not honoring his financial obligations. Disqualifying Conditions 19(a) (inability or unwillingness to satisfy debts) and 19(c) (a history of not meeting financial obligations) are applicable.

Once the Government established a prima facie case under Guideline F, the burden shifted to applicant to show he has reformed. Applicant met his burden. He offered credible evidence that the two debts listed in the SOR were discharged by the bankruptcy court, and that he has not been delinquent on any new debts since receiving his discharge over two years ago. His statements in response to the SOR indicate he is committed to avoiding future financial problems.

Based on the foregoing, and after consideration of the factors set forth in Enclosure 2, Paragraph 2 of the Directive, Guideline F is found for applicant.

FORMAL FINDINGS

PARAGRAPH 1: FOR THE APPLICANT

DECISION

In light of all the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant or continue a security clearance for applicant.

Joseph Testan Administrative Judge

Pages 18-19.

FOOTNOTES

FOR GOVERNMENT Jennifer I. Goldstein, Department Counsel

FOR APPLICANT Pro Se