ISCR Case 10-09690.h1

Case Headnote

ISCR Case No. 10-09690.h1

grantedNov 21, 2011· Hon. Mary E. Henry· hearing

Summary

A 31-year-old database analyst for a Department of Defense contractor was granted a security clearance despite initial concerns under Guideline F (Financial Considerations). These concerns stemmed from financial difficulties, primarily due to job losses in 2007, which led to several outstanding debts.

Specifically, the applicant faced allegations regarding a $1,755 judgment, a $63,000 home equity debt, a $3,460 debt, and a $33 debt. She successfully resolved the $1,755 judgment in July 2011 and the $3,460 debt in June 2011, utilizing tax refunds and savings. The $33 debt was also resolved. The $63,000 home equity debt, arising from a refinanced second mortgage on a foreclosed property, remains outstanding. While the primary mortgage deficiency was barred by state law, the home equity debt is not. The applicant has saved $1,000 towards a potential settlement of this debt, with the creditor indicating a willingness to entertain an offer if 10% of the debt is available.

The clearance was granted because the applicant demonstrated a good-faith effort to resolve her debts and improve financial stability. Her financial issues were largely attributed to circumstances beyond her control, such as job losses. Furthermore, she presented a plan to address her remaining debt and had a proven track record of resolving other obligations.

Why the Applicant Prevailed

The applicant demonstrated a good-faith effort to resolve debts and improve financial stability.
The applicant's financial issues were largely due to circumstances beyond her control, including job losses.
The applicant has a plan in place to address her remaining debt and has shown a track record of resolving other debts.

Conditions Referenced

Disqualifying

F.1.araisedInability or Unwillingness to Satisfy Debts
F.1.craisedA History of Not Meeting Financial Obligations

Mitigating

F.2.arejectedThe Behavior Happened so Long Ago, Was so Infrequent, or Occurred Under Such Circumstances That It Is Unlikely to Recur
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 a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts

Key Rule Quoted

“A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence.”

Procedural Posture

SOR issuedJun 17, 2011
Answer filedJul 12, 2011
Hearing heldOct 26, 2011
Decision dateNov 21, 2011

Cite For

Mitigation of Financial Issues Under Guideline F
Consideration of Circumstances Beyond an Applicant's Control
Demonstration of a Good-faith Effort to Resolve Debts

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 contacted her former homeowners association in September 2010 to resolve the judgment in SOR allegation 1.a ($1,755). After months of effort, she located the owner of the debt. She negotiated a settlement of the judgment and paid it in July 2011 with money from her tax refund and savings. $1,755	For Applicant	Judgment Against Applicant	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	Documented Debt Paid in Full
1.b	The $63,000 debt in SOR allegation 1.b arose from a home equity line on her house in State A. She purchased this house in 2005 with an 80% primary mortgage loan and a 20% second mortgage. Two months after closing on her house, she refinanced the second mortgage because its interest rate was 12%. Her refinanced loan had a lower interest rate, but it was a home equity loan. After she defaulted on her mortgage loan payments, the mortgage lender foreclosed on this house. The foreclosure paid the primary mortgage. Any deficiency on this loan is barred from collection under the State’s anti-deficiency statute. The home equity is not barred from collection, and Applicant agrees that it is a valid debt. She has contacted the creditor and attempted to settle this debt. The creditor will not agree to a payment plan for a settlement amount. Instead, the creditor advised that if she had 10% of the debt, it would entertain a settlement offer. As of the hearing, she has saved $1,000 of the $6,300 she needed to resolve this debt. $63,000	For Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts	Claimed Debt Disputed with Creditor
1.c	Applicant contacted the creditor in SOR allegation 1.c ($3,460) in January 2011. After several telephone conversations, she and the creditor agreed to a settlement, which she paid in June 2011 upon receiving her tax refund. $3,460	For Applicant	Unspecified Financial	Denied	(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	Documented Debt Paid in Full
1.d	The $33 debt in SOR allegation 1.d was resolved. $33	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	Documented Debt Paid in Full

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

Applicant contacted her former homeowners association in September 2010 to resolve the judgment in SOR allegation 1.a ($1,755). After months of effort, she located the owner of the debt. She negotiated a settlement of the judgment and paid it in July 2011 with money from her tax refund and savings.

$1,755

For Applicant

Judgment Against Applicant

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

Documented

Debt Paid in Full

1.b

The $63,000 debt in SOR allegation 1.b arose from a home equity line on her house in State A. She purchased this house in 2005 with an 80% primary mortgage loan and a 20% second mortgage. Two months after closing on her house, she refinanced the second mortgage because its interest rate was 12%. Her refinanced loan had a lower interest rate, but it was a home equity loan. After she defaulted on her mortgage loan payments, the mortgage lender foreclosed on this house. The foreclosure paid the primary mortgage. Any deficiency on this loan is barred from collection under the State’s anti-deficiency statute. The home equity is not barred from collection, and Applicant agrees that it is a valid debt. She has contacted the creditor and attempted to settle this debt. The creditor will not agree to a payment plan for a settlement amount. Instead, the creditor advised that if she had 10% of the debt, it would entertain a settlement offer. As of the hearing, she has saved $1,000 of the $6,300 she needed to resolve this debt.

$63,000

For Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

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

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

Claimed

Debt Disputed with Creditor

1.c

Applicant contacted the creditor in SOR allegation 1.c ($3,460) in January 2011. After several telephone conversations, she and the creditor agreed to a settlement, which she paid in June 2011 upon receiving her tax refund.

$3,460

For Applicant

Unspecified Financial

Denied

(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

Documented

Debt Paid in Full

1.d

The $33 debt in SOR allegation 1.d was resolved.

$33

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

Documented

Debt Paid in Full

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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

PROCEDURAL RULINGS

FINDINGS OF FACT

POLICIES

ANALYSIS

WHOLE PERSON CONCEPT

FORMAL FINDINGS

CONCLUSION

FOOTNOTES