ISCR Case 08-03845.h1

Case Headnote

ISCR Case No. 08-03845.h1

deniedDec 4, 2008· Hon. Joan Caton Anthony· hearing

Summary

A 50-year-old federal contractor with military service was denied a security clearance under Guideline F (Financial Considerations) due to unresolved financial delinquencies. The applicant's history included multiple tax liens and two bankruptcies. Despite a significant income, he failed to present a clear plan to address his debts, raising concerns about his reliability and judgment.

Specific allegations included a Chapter 13 bankruptcy petition in April 1997, which was dismissed in September 1999 due to missed payments after his wife's illness. This was converted to a Chapter 7 bankruptcy and discharged in December 2002. The applicant also denied a $500 debt, providing a bank statement showing a payment, though documentation was insufficient to link it to the specific creditor. However, a June 2008 credit report indicated this debt was settled. Additionally, he acknowledged a charged-off debt of approximately $14,078 for a voluntarily repossessed vehicle.

The denial was based on the applicant's failure to mitigate security concerns related to his financial delinquencies. He had a history of bankruptcy and continued to accumulate unpaid debts even after receiving a fresh start. Furthermore, he did not provide sufficient documentation to support his claims of debt repayment or participation in financial counseling.

Why the Applicant Was Denied

The applicant failed to mitigate security concerns related to financial delinquencies.
The applicant has a history of bankruptcy and continued to accumulate unpaid debts after receiving a fresh start.
The applicant did not provide sufficient documentation to support claims of debt repayment or financial counseling.

Conditions Referenced

Disqualifying

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

Mitigating

AG ¶ 20(d)appliedGood-faith Effort to Repay Overdue Creditors
AG ¶ 20(a)rejectedUnresolved Financial Delinquency Unlikely to RecurThe applicant's financial issues are ongoing and have not been resolved.
AG ¶ 20(b)rejectedConditions Beyond the Person's ControlThe applicant's financial problems have persisted despite a significant income.
AG ¶ 20(c)rejectedEvidence of Financial CounselingThe applicant did not participate in financial counseling.

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.”

Procedural Posture

SOR issuedJul 11, 2008
Answer filedJul 30, 2008Written notarized Answer submitted.
Hearing held—Applicant requested decision on the record.
Decision dateDec 4, 2008

Cite For

Denial of Security Clearance Due to Unresolved Financial Issues Under Guideline F
Impact of Bankruptcy History on Security Clearance Eligibility
Importance of Demonstrating a Plan to Address Financial Delinquencies for Security Clearance Approval.

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	In April 1997, Applicant petitioned for Chapter 13 bankruptcy. Applicant and his wife planned to make the Chapter 13 payments from their incomes. Applicant’s wife suffered a heart attack and was unable to work. The petition was dismissed in September 1999, when Applicant failed to make required payments. In August 2002 Applicant and his wife filed a motion to convert the Chapter 13 to a Chapter 7 bankruptcy. Applicant’s motion was granted, and his Chapter 7 bankruptcy was discharged in December 2002.	Against Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	Applicant denied a debt of approximately $500 and asserted he had paid it on March 19, 2008. To corroborate his payment of the debt, he provided a photocopy of his bank statement showing a payment of $500 made to a creditor on March 18, 2008. Applicant’s documentation was insufficient to show that he had paid the creditor identified on the SOR. However, his credit report of June 19, 2008, shows the debt identified at SOR ¶ 1.g as settled. $500	For Applicant	Unspecified Financial	Denied	—	—	—
1.h	Applicant denied a charged-off debt of approximately $14,078 that had not been paid as of March 15, 2008. In his Answer to the SOR and in his supplemental Answer to the SOR, he acknowledged he had financed a vehicle through the creditor identified in the allegation at SOR ¶ 1.h. He stated that the payments on the vehicle were causing him to fall into debt, and he therefore gave the vehicle up to the creditor as a voluntary repossession. $14,078	Against Applicant	Auto Loan Debt	Denied	(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

In April 1997, Applicant petitioned for Chapter 13 bankruptcy. Applicant and his wife planned to make the Chapter 13 payments from their incomes. Applicant’s wife suffered a heart attack and was unable to work. The petition was dismissed in September 1999, when Applicant failed to make required payments. In August 2002 Applicant and his wife filed a motion to convert the Chapter 13 to a Chapter 7 bankruptcy. Applicant’s motion was granted, and his Chapter 7 bankruptcy was discharged in December 2002.

Against Applicant

Bankruptcy Filing

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.g

Applicant denied a debt of approximately $500 and asserted he had paid it on March 19, 2008. To corroborate his payment of the debt, he provided a photocopy of his bank statement showing a payment of $500 made to a creditor on March 18, 2008. Applicant’s documentation was insufficient to show that he had paid the creditor identified on the SOR. However, his credit report of June 19, 2008, shows the debt identified at SOR ¶ 1.g as settled.

$500

For Applicant

Unspecified Financial

Denied

—

1.h

Applicant denied a charged-off debt of approximately $14,078 that had not been paid as of March 15, 2008. In his Answer to the SOR and in his supplemental Answer to the SOR, he acknowledged he had financed a vehicle through the creditor identified in the allegation at SOR ¶ 1.h. He stated that the payments on the vehicle were causing him to fall into debt, and he therefore gave the vehicle up to the creditor as a voluntary repossession.

$14,078

Against Applicant

Auto Loan Debt

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

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Case Profile

Summary

Why the Applicant Was Denied

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