ISCR Case 08-04624.h1

Case Headnote

ISCR Case No. 08-04624.h1

deniedJul 9, 2009· Hon. Paul J. Mason· hearing

Summary

A 62-year-old security guard was denied a security clearance under Guideline F (Financial Considerations) due to a history of financial difficulties and unresolved debts. The Statement of Reasons detailed several financial issues, including a dismissed Chapter 13 bankruptcy petition in April 2005, which the applicant attributed to fraudulent advice, and a Chapter 7 bankruptcy petition filed in October 2005. The Chapter 7 petition listed approximately $19,700 in assets and $47,368 in liabilities, with most dischargeable debts, except for a student loan, discharged in February 2006.

Specific debts included a $4,685 credit card judgment discharged in the Chapter 7 bankruptcy, a $1,917 telephone debt also included in the Chapter 7 filing, and a $944 medical services account that the applicant denied. Other debts included a $63 telephone bill, which was paid in full by March 2009, and a $51,586 student loan for his daughter, which the applicant incorrectly believed was discharged. Additionally, there was a $1,615 state tax lien, paid in full for $1,932 in March 2009, a $3,606 utility debt that the applicant denied without explanation, and a $174 debt to his bankruptcy attorney, paid in December 2008.

Despite some payments made after receiving the Statement of Reasons, the judge found insufficient evidence of financial stability and responsibility. The denial was based on unresolved debts exceeding $53,000, including the student loan and utility bill, and a failure to demonstrate consistent effort to address financial obligations prior to the Statement of Reasons.

Why the Applicant Was Denied

The applicant had unresolved debts exceeding $53,000, including a student loan and utility bill.
The applicant's financial issues were exacerbated by a history of bankruptcy, including a dismissed Chapter 13 petition and a Chapter 7 discharge.
The applicant failed to demonstrate a consistent effort to address his financial obligations prior to receiving the Statement of Reasons.

Conditions Referenced

Disqualifying

AG ¶ 19.araisedInability or Unwillingness to Satisfy Debts
AG ¶ 19.craisedA History of Not Meeting Financial Obligations

Mitigating

AG ¶ 20.arejectedThe Behavior Happened so Long Ago, Was Infrequent, or Occurred Under Circumstances Unlikely to RecurThe applicant's financial issues persisted for over two years after bankruptcy discharge.
AG ¶ 20.brejectedConditions That Resulted in the Financial Problem Were Largely Beyond the Person's ControlThe applicant's financial issues were not adequately addressed for an extended period.
AG ¶ 20.crejectedThe Person Has Received or Is Receiving Counseling for the ProblemThe applicant provided no evidence of financial counseling.
AG ¶ 20.drejectedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsThe applicant only began addressing debts after receiving the SOR.

Key Rule Quoted

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

Procedural Posture

SOR issuedAug 13, 2008
Answer filedDec 12, 2008
Hearing held—Decision made on the record in lieu of a hearing.
Decision dateJul 9, 2009

Cite For

Insufficient Evidence of Financial Stability Under Guideline F
Impact of Unresolved Debts on Security Clearance Eligibility
Consideration of the Whole Person Concept in Financial Cases

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 filed a Chapter 13 petition in April 2005 to keep his house, a common reason for protecting real estate. The petition was dismissed in May 2005 before confirmation. Applicant contends a title company fraudulently convinced him to file this petition. He lost his house and filed a complaint with the state banking commission. No additional information was provided to substantiate his fraud claim.	Against Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	Applicant filed a Chapter 7 bankruptcy petition in October 2005. He listed approximately $19,700 in assets and $47,368 in liabilities. He was discharged from all dischargeable debts, except for the student loan, in February 2006.	Against Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	$4,685, credit card. The debt became a judgment in October 2002. It was discharged in Applicant’s Chapter 7 bankruptcy in February 2006 (SOR 1.b.). $4,685	For Applicant	Credit Card Debt	Denied	—	—	—
1.d	$1,917, telephone debt that was placed for collection in 2002. Applicant’s credit report dated March 23, 2009, reflects that the account was included in his Chapter 7 petition (SOR 1.b.). $1,917	For Applicant	Utility or Phone Debt	Denied	—	—	—
1.e	$944, medical services. Two government credit reports list this account. Applicant denies this account because he filed all claims with one provider. As Applicant indicated in his response to the FORM, the medical account does not appear in his March 2009, credit report. $944	For Applicant	Medical Debt	Denied	—	—	—
1.f	$63, telephone. Applicant was notified by the collection agency on March 27, 2009, his account was paid in full (response to FORM). $63	For Applicant	Utility or Phone Debt	Denied	—	—	—
1.g	$51,586, student loan of Applicant’s daughter. From May 2005 to at least July 2007 (July 2007 interview, Item 12), Applicant was living with his daughter. According to his response to the FORM, his claim is that he assumed incorrectly the loan was discharged in his Chapter 7 bankruptcy. $51,586	Against Applicant	Student Loan Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	$1,615, state tax lien. On March 25, 2009, Applicant paid $1,932 in full satisfaction of the lien. $1,615	For Applicant	Tax Unpaid	Denied	—	—	—
1.i	$3,606, utility. In his answer to the SOR, Applicant denied this account, but did not provide an explanation as to why he denied the account. $3,606	Against Applicant	Utility or Phone Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.j	$174, debt to Applicant’s bankruptcy attorney in October 2005. Applicant paid the debt by check on December 9, 2008 (response to FORM). $174	For Applicant	Unspecified Financial	Admitted	—	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

Applicant filed a Chapter 13 petition in April 2005 to keep his house, a common reason for protecting real estate. The petition was dismissed in May 2005 before confirmation. Applicant contends a title company fraudulently convinced him to file this petition. He lost his house and filed a complaint with the state banking commission. No additional information was provided to substantiate his fraud claim.

Against Applicant

Bankruptcy Filing

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.b

Applicant filed a Chapter 7 bankruptcy petition in October 2005. He listed approximately $19,700 in assets and $47,368 in liabilities. He was discharged from all dischargeable debts, except for the student loan, in February 2006.

Against Applicant

Bankruptcy Filing

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.c

$4,685, credit card. The debt became a judgment in October 2002. It was discharged in Applicant’s Chapter 7 bankruptcy in February 2006 (SOR 1.b.).

$4,685

For Applicant

Credit Card Debt

Denied

—

1.d

$1,917, telephone debt that was placed for collection in 2002. Applicant’s credit report dated March 23, 2009, reflects that the account was included in his Chapter 7 petition (SOR 1.b.).

$1,917

For Applicant

Utility or Phone Debt

Denied

—

1.e

$944, medical services. Two government credit reports list this account. Applicant denies this account because he filed all claims with one provider. As Applicant indicated in his response to the FORM, the medical account does not appear in his March 2009, credit report.

$944

For Applicant

Medical Debt

Denied

—

1.f

$63, telephone. Applicant was notified by the collection agency on March 27, 2009, his account was paid in full (response to FORM).

$63

For Applicant

Utility or Phone Debt

Denied

—

1.g

$51,586, student loan of Applicant’s daughter. From May 2005 to at least July 2007 (July 2007 interview, Item 12), Applicant was living with his daughter. According to his response to the FORM, his claim is that he assumed incorrectly the loan was discharged in his Chapter 7 bankruptcy.

$51,586

Against Applicant

Student Loan Debt

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.h

$1,615, state tax lien. On March 25, 2009, Applicant paid $1,932 in full satisfaction of the lien.

$1,615

For Applicant

Tax Unpaid

Denied

—

1.i

$3,606, utility. In his answer to the SOR, Applicant denied this account, but did not provide an explanation as to why he denied the account.

$3,606

Against Applicant

Utility or Phone Debt

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.j

$174, debt to Applicant’s bankruptcy attorney in October 2005. Applicant paid the debt by check on December 9, 2008 (response to FORM).

$174

For Applicant

Unspecified Financial

Admitted

—

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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

FORMAL FINDINGS

CONCLUSION