ISCR Case 11-10184.h1

Case Headnote

ISCR Case No. 11-10184.h1

deniedApr 30, 2013· Hon. Jennifer I. Goldstein· hearing

Summary

A 63-year-old government contractor was denied a security clearance under Guideline F (Financial Considerations) due to significant financial delinquencies totaling $603,433. The applicant had 11 alleged delinquent accounts, including medical debts, a judgment, credit card debt, and multiple mortgages.

While some debts were resolved, such as two medical accounts, a judgment, and a home equity line of credit that received full forgiveness, several substantial debts remained unaddressed. These included a $65 medical debt, a $22,000 credit card account, a $109,000 mortgage, a $49,000 secondary mortgage where the applicant failed to inform the creditor of a change in property use, and a $1,554 account that remained disputed. Two other mortgages, totaling $154,000 and $97,000, were resolved through foreclosure with no remaining liability.

Ultimately, the applicant failed to provide sufficient evidence to resolve remaining debts totaling $181,619. The decision noted that the financial delinquencies were ongoing and unresolved despite the applicant securing full-time employment in 2009, and that the applicant did not demonstrate a meaningful track record in resolving financial issues. The security clearance was DENIED.

Why the Applicant Was Denied

Applicant failed to provide sufficient evidence addressing remaining debts totaling $181,619.
Financial delinquencies were ongoing and unresolved despite securing full-time employment in 2009.
Applicant did not demonstrate a meaningful track record in resolving financial issues.

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(a)rejectedBehavior Happened so Long Ago, Was Infrequent, or Unlikely to RecurApplicant's financial delinquencies are ongoing.
AG ¶ 20(b)rejectedConditions Largely Beyond the Person's ControlApplicant failed to explain continued delinquencies after employment.
AG ¶ 20(c)rejectedReceived Counseling for the ProblemInsufficient evidence of effective counseling.
AG ¶ 20(d)rejectedGood-faith Effort to Repay Overdue CreditorsLack of documentation showing efforts to resolve debts.
AG ¶ 20(e)rejectedReasonable Basis to Dispute Legitimacy of Past-due DebtInsufficient documentation to support disputes.

Key Rule Quoted

“A security clearance adjudication is not a debt collection procedure. It is a process designed to evaluate an applicant’s judgment, reliability, and trustworthiness.”

Procedural Posture

SOR issuedDec 18, 2012
Answer filedJan 14, 2013
Hearing heldApr 9, 2013
Decision dateApr 30, 2013

Cite For

Evaluation of Financial Considerations Under Guideline F
Impact of Unresolved Debts on Security Clearance Eligibility
Importance of Demonstrating a Meaningful Track Record in Resolving Financial Issues

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 was indebted on a delinquent medical account totaling $101, as alleged in SOR ¶ 1.a. Applicant testified that this medical debt was paid by his insurance company. Applicant’s credit report dated April 7, 2013, reflects this debt is paid. $101	For Applicant	Medical Debt	Denied	—	—	Documented Debt Paid in Full
1.b	Applicant was indebted on a delinquent medical account totaling $359, as alleged in SOR ¶ 1.b. Applicant presented a letter from this creditor that reflects on October 25, 2012, Applicant satisfied this debt in full for $435. He also presented a copy of the cancelled check, dated October 19, 2012, showing payment of $435 to this creditor. This debt is satisfied. $359	For Applicant	Medical Debt	Denied	—	—	Documented Debt Paid in Full
1.c	Applicant was indebted on a delinquent medical account totaling $65, as alleged in SOR ¶ 1.c. Applicant’s credit report dated April 7, 2013, reflected this debt as unpaid. Applicant testified that he disputed this debt with the creditor, a dentist, because he performed work on the wrong tooth. Applicant failed to produce documentation to substantiate his dispute with this creditor. This debt is unresolved. $65	Against Applicant	Medical Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	Applicant was indebted on a judgment against him totaling $6,177, as alleged in SOR ¶ 1.d. Applicant presented a copy of two cancelled checks made out to this creditor, the first dated October 26, 2012, in the amount of $823.64 and the second dated December 27, 2012, in the amount of $823. Applicant presented a letter dated January 22, 2013, from this creditor that confirmed he completed the terms of his settlement agreement and was not responsible for any additional payments on this account. This debt is satisfied. $6,177	For Applicant	Judgment Against Applicant	Denied	—	—	Documented Debt Paid in Full
1.e	Applicant was indebted on a delinquent credit card account totaling $22,000, as alleged in SOR ¶ 1.e. Applicant presented a copy of two checks made out to this creditor: the first was dated September 27, 2012, and was for $200; the second was dated October 29, 2012, and was for $223. Applicant failed to present additional proof that he is making payments to this creditor. His credit report of April 8, 2013, reflects that this account is in collections. This debt has not been satisfied. $22,000	Against Applicant	Credit Card Debt	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	Applicant was indebted on a delinquent account totaling $109,000, as alleged in SOR ¶ 1.f. This debt was the primary mortgage for Property B. Applicant testified that he was approved for a loan modification on this mortgage and presented a letter dated September 12, 2012, as evidence of the modification. However, the loan number listed on the September 12, 2012 letter from the creditor reflects the conventional real estate mortgage is for $359,000, that is past due in the amount of $328,000 as of April 7, 2013, the date of Applicant’s most recent credit report. Applicant has not presented sufficient evidence to establish this debt is being satisfied or otherwise repaid. $109,000	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	Applicant was indebted on a delinquent account totaling $158,000, as alleged in SOR ¶ 1.g. This debt was for a Home Equity Line of Credit on Property A. On September 19, 2012, Applicant received a letter from this creditor that notified him he had been granted “full forgiveness of the remaining principal balance of $143,912.49" on this debt. This debt is resolved. $158,000	For Applicant	Unspecified Financial	Denied	—	—	Documented Debt Paid in Full
1.h	Applicant was indebted on a delinquent account totaling $49,000, as alleged in SOR ¶ 1.h. This debt was also a secondary mortgage for Property A. Applicant indicated this debt was “rolled over” into his loan modification agreement. However, he testified the loan modification had not yet been finalized. He presented a copy of a loan modification agreement dated September 19, 2012, in which Applicant represented in part, “One of the borrowers signing this Agreement lives in the Property as a principal residence.” The modification included a provision for termination of the agreement if any of the representations “are no longer true.” Shortly after signing the initial modification agreement, Applicant moved out of this residence and rented the property. He had not informed the creditor that the property was converted to an investment property after their initial modification agreement. $49,000	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.i	Applicant was indebted on a delinquent account totaling $1,554, as alleged in SOR ¶ 1.j. Applicant testified that he made payment arrangements with this creditor to repay $79 per month for one year. However, he testified that after successfully making those payments, the creditor did not abide by their oral agreement and the creditor is still attempting to collect this debt. He then contested the debt. He presented a letter from this creditor dated January 11, 2013, indicating “the information that appears on his credit report is correct,” despite Applicant’s dispute of the debt. This debt has not been satisfied. $1,554	Against Applicant	Unspecified Financial	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.j	Applicant was indebted on a delinquent account totaling $154,000, as alleged in SOR ¶ 1.k. This debt was for a mortgage on Property E. Applicant’s April 8, 2013 credit report reflects that the home has been foreclosed upon. Applicant testified he has no remaining liability for this mortgage debt after foreclosure. $154,000	For Applicant	Mortgage or Home Loan Debt	Denied	—	—	Documented Debt Paid in Full
1.k	Applicant was indebted on a delinquent mortgage account totaling $97,000, as alleged in SOR ¶ 1.l. This debt was for Property D. Applicant’s April 8, 2013 credit report reflects that the home has been foreclosed upon. Applicant testified he has no remaining liability for this debt after foreclosure. $97,000	For Applicant	Mortgage or Home Loan Debt	Denied	—	—	Documented Debt Paid in Full

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

Applicant was indebted on a delinquent medical account totaling $101, as alleged in SOR ¶ 1.a. Applicant testified that this medical debt was paid by his insurance company. Applicant’s credit report dated April 7, 2013, reflects this debt is paid.

$101

For Applicant

Medical Debt

Denied

—

Documented

Debt Paid in Full

1.b

Applicant was indebted on a delinquent medical account totaling $359, as alleged in SOR ¶ 1.b. Applicant presented a letter from this creditor that reflects on October 25, 2012, Applicant satisfied this debt in full for $435. He also presented a copy of the cancelled check, dated October 19, 2012, showing payment of $435 to this creditor. This debt is satisfied.

$359

For Applicant

Medical Debt

Denied

—

Documented

Debt Paid in Full

1.c

Applicant was indebted on a delinquent medical account totaling $65, as alleged in SOR ¶ 1.c. Applicant’s credit report dated April 7, 2013, reflected this debt as unpaid. Applicant testified that he disputed this debt with the creditor, a dentist, because he performed work on the wrong tooth. Applicant failed to produce documentation to substantiate his dispute with this creditor. This debt is unresolved.

$65

Against Applicant

Medical Debt

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.d

Applicant was indebted on a judgment against him totaling $6,177, as alleged in SOR ¶ 1.d. Applicant presented a copy of two cancelled checks made out to this creditor, the first dated October 26, 2012, in the amount of $823.64 and the second dated December 27, 2012, in the amount of $823. Applicant presented a letter dated January 22, 2013, from this creditor that confirmed he completed the terms of his settlement agreement and was not responsible for any additional payments on this account. This debt is satisfied.

$6,177

For Applicant

Judgment Against Applicant

Denied

—

Documented

Debt Paid in Full

1.e

Applicant was indebted on a delinquent credit card account totaling $22,000, as alleged in SOR ¶ 1.e. Applicant presented a copy of two checks made out to this creditor: the first was dated September 27, 2012, and was for $200; the second was dated October 29, 2012, and was for $223. Applicant failed to present additional proof that he is making payments to this creditor. His credit report of April 8, 2013, reflects that this account is in collections. This debt has not been satisfied.

$22,000

Against Applicant

Credit Card Debt

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.f

Applicant was indebted on a delinquent account totaling $109,000, as alleged in SOR ¶ 1.f. This debt was the primary mortgage for Property B. Applicant testified that he was approved for a loan modification on this mortgage and presented a letter dated September 12, 2012, as evidence of the modification. However, the loan number listed on the September 12, 2012 letter from the creditor reflects the conventional real estate mortgage is for $359,000, that is past due in the amount of $328,000 as of April 7, 2013, the date of Applicant’s most recent credit report. Applicant has not presented sufficient evidence to establish this debt is being satisfied or otherwise repaid.

$109,000

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.g

Applicant was indebted on a delinquent account totaling $158,000, as alleged in SOR ¶ 1.g. This debt was for a Home Equity Line of Credit on Property A. On September 19, 2012, Applicant received a letter from this creditor that notified him he had been granted “full forgiveness of the remaining principal balance of $143,912.49" on this debt. This debt is resolved.

$158,000

For Applicant

Unspecified Financial

Denied

—

Documented

Debt Paid in Full

1.h

Applicant was indebted on a delinquent account totaling $49,000, as alleged in SOR ¶ 1.h. This debt was also a secondary mortgage for Property A. Applicant indicated this debt was “rolled over” into his loan modification agreement. However, he testified the loan modification had not yet been finalized. He presented a copy of a loan modification agreement dated September 19, 2012, in which Applicant represented in part, “One of the borrowers signing this Agreement lives in the Property as a principal residence.” The modification included a provision for termination of the agreement if any of the representations “are no longer true.” Shortly after signing the initial modification agreement, Applicant moved out of this residence and rented the property. He had not informed the creditor that the property was converted to an investment property after their initial modification agreement.

$49,000

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.i

Applicant was indebted on a delinquent account totaling $1,554, as alleged in SOR ¶ 1.j. Applicant testified that he made payment arrangements with this creditor to repay $79 per month for one year. However, he testified that after successfully making those payments, the creditor did not abide by their oral agreement and the creditor is still attempting to collect this debt. He then contested the debt. He presented a letter from this creditor dated January 11, 2013, indicating “the information that appears on his credit report is correct,” despite Applicant’s dispute of the debt. This debt has not been satisfied.

$1,554

Against Applicant

Unspecified Financial

Denied

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.j

Applicant was indebted on a delinquent account totaling $154,000, as alleged in SOR ¶ 1.k. This debt was for a mortgage on Property E. Applicant’s April 8, 2013 credit report reflects that the home has been foreclosed upon. Applicant testified he has no remaining liability for this mortgage debt after foreclosure.

$154,000

For Applicant

Mortgage or Home Loan Debt

Denied

—

Documented

Debt Paid in Full

1.k

Applicant was indebted on a delinquent mortgage account totaling $97,000, as alleged in SOR ¶ 1.l. This debt was for Property D. Applicant’s April 8, 2013 credit report reflects that the home has been foreclosed upon. Applicant testified he has no remaining liability for this debt after foreclosure.

$97,000

For Applicant

Mortgage or Home Loan Debt

Denied

—

Documented

Debt Paid in Full

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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