ISCR Case 11-11336.h1

Case Headnote

ISCR Case No. 11-11336.h1

grantedMay 21, 2013· Hon. Jennifer I. Goldstein· hearing

Summary

A 45-year-old government contractor and former Marine Corps gunnery sergeant was granted a security clearance despite concerns under Guideline F (Financial Considerations). The applicant faced allegations related to 14 delinquent debts totaling $40,094 and a home foreclosure.

The Statement of Reasons detailed various financial issues, including a $948 judgment for community association dues, a $4,520 collection account for a water softener, and a $23,248 debt from a repossessed vehicle. Other debts included medical bills, cell phone charges, wireless cable bills, personal loans, dental bills, and a time-share property. The applicant's home foreclosure in December 2008 stemmed from an adjustable-rate mortgage that caused payments to double and then quadruple, making the property unaffordable.

The judge found that the applicant had resolved most of the debts, including the judgment, medical debt, cell phone debt, wireless cable bills, personal loan, dental bill, time-share, and cable television services. The vehicle repossession debt was resolved as part of a class action settlement, and the foreclosure debts were also resolved with no further amounts owed. For the remaining debts, the applicant demonstrated a good-faith effort by entering into payment plans and making timely payments. The applicant also engaged in financial counseling. The decision to grant clearance was based on the resolution of most debts, ongoing payments for others, and the finding that many financial difficulties arose from circumstances beyond the applicant's control, such as unemployment and an unexpected increase in mortgage payments.

Why the Applicant Prevailed

Most of the applicant's debts were resolved or satisfied before the hearing.
The applicant demonstrated a good-faith effort to repay remaining debts with a structured payment plan.
The applicant's financial difficulties were largely due to circumstances beyond his control, including unemployment.

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)appliedBehavior Happened so Long Ago or Occurred Under Circumstances Unlikely to Recur
AG ¶ 20(b)appliedConditions That Resulted in the Financial Problem Were Largely Beyond the Person’s Control
AG ¶ 20(c)appliedReceived or Is Receiving Counseling for the Problem
AG ¶ 20(d)appliedInitiated a Good-faith Effort to Repay Overdue Creditors

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 issuedJan 11, 2013
Answer filedFeb 11, 2013
Hearing heldApr 24, 2013
Decision dateMay 21, 2013

Cite For

Mitigation of Financial Issues Under Guideline F
Good-faith Efforts to Resolve Debts
Impact of External Circumstances on Financial Stability

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 is indebted on a judgment in the amount of $948 (as alleged in SOR ¶ 1.a). This debt was for unpaid community association dues. Applicant presented documentation from the court that acknowledges satisfaction of the judgment. This debt is satisfied. $948	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	Applicant was indebted on a collection account in the amount of $4,520 (as alleged in SOR ¶ 1.b). This debt was for a water softener system that Applicant installed in his former home. Applicant provided a letter from this creditor that acknowledged Applicant agreed to make payments of $100 per month for 31 months, beginning February 15, 2013. Applicant provided documentation showing he made two timely payments to this creditor according to the agreement. Applicant is addressing this debt. $4,520	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 Payment Plan with Creditor
1.c	Applicant was indebted on a delinquent medical debt in the amount of $107 (as alleged in SOR ¶ 1.c). Applicant produced a letter from this creditor that indicated Applicant “completely satisfied [his] obligation to our office.” This debt is satisfied. $107	For Applicant	Medical Debt	Denied	—	—	Documented Debt Paid in Full
1.d	Applicant was indebted on a collection account in the amount of $627 (as alleged in SOR ¶ 1.d). This debt was for a cell phone and became delinquent when Applicant was unemployed. Applicant provided a letter from the collection agent that shows this debt is paid in full. This debt is satisfied. $627	For Applicant	Unspecified Financial	Denied	—	—	Documented Debt Paid in Full
1.e	Applicant is indebted on a collection account in the amount of $3,058 (as alleged in SOR ¶ 1.e). This debt is a duplicate of SOR ¶ 1.b. Applicant is making payments on this debt, as set out above. $3,058	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 Payment Plan with Creditor
1.f	Applicant was indebted on a collection account for a wireless cable bill in the amount of $622 (as alleged in SOR ¶ 1.f). Applicant provided a letter from the collection agent that shows this debt is paid in full. This debt is satisfied. $622	For Applicant	Unspecified Financial	Denied	—	—	Documented Debt Paid in Full
1.g	Applicant was indebted on a collection account in the amount of $109 (as alleged in SOR ¶ 1.g). This debt was for a personal loan. A letter from the creditor indicated that this debt was paid in full on February 8, 2013. $109	For Applicant	Personal Loan Debt	Denied	—	—	Documented Debt Paid in Full
1.h	Applicant was indebted on a collection account in the amount of $3,730 (as alleged in SOR ¶ 1.h). Applicant provided a letter from this creditor that acknowledged he agreed to make payments of $100 per month. Applicant provided documentation showing he made two timely payments to this creditor according to the agreement. Applicant is addressing this debt. $3,730	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 Payment Plan with Creditor
1.i	Applicant was indebted on a vehicle that was repossessed in the amount of $23,248 (as alleged in SOR ¶ 1.i). Applicant contacted the creditor to arrange payments and learned that this debt was part of a class action suit against the creditor. The creditor informed Applicant by letter dated April 23, 2013, that as part of the settlement of the suit Applicant’s account had been closed and the deficiency was deleted from Applicant’s credit report. This debt is resolved. $23,248	For Applicant	Auto Loan Debt	Denied	—	—	—
1.j	Applicant was indebted on a collection account in the amount of $528 (as alleged in SOR ¶ 1.j). This debt was for an unpaid dental bill. Applicant produced a letter from this creditor showing this debt is paid in full. This debt has been satisfied. $528	For Applicant	Medical Debt	Denied	—	—	Documented Debt Paid in Full
1.k	Applicant was indebted on a collection account in the amount of $1,413 (as alleged in SOR ¶ 1.k). This debt was for a time-share property that Applicant purchased in 2003. He was unable to make payments on this property when he was unemployed and the debt became delinquent. Applicant produced an account statement showing this debt as “$0 past due” and “$0 current balance.” This debt is resolved. $1,413	For Applicant	Unspecified Financial	Denied	—	—	—
1.l	Applicant was indebted on a collection account in the amount of $170 (as alleged in SOR ¶ 1.l). This debt was for cable television services. Applicant produced a letter from this creditor showing this debt was paid in full on February 7, 2013. This debt is resolved. $170	For Applicant	Unspecified Financial	Denied	—	—	Documented Debt Paid in Full
1.m	Applicant was indebted on a collection account in the amount of $393 (as alleged in SOR ¶ 1.m). This debt belonged to Applicant’s son, who bears the same name as Applicant. Applicant satisfied this debt on February 5, 2013. $393	For Applicant	Unspecified Financial	Denied	—	—	Documented Debt Paid in Full
1.n	Applicant was indebted on a collection account in the amount of $621 (as alleged in SOR ¶ 1.n). Applicant provided a letter from this creditor that stated this debt was a duplicate of the debt alleged above in SOR ¶ 1.f. This debt is satisfied. $621	For Applicant	Unspecified Financial	Denied	—	—	Documented Debt Paid in Full
1.o	Applicant’s home was foreclosed upon in December 2008 (as alleged in SOR ¶ 1.o). He purchased his home in January 2005. It was the first time he had purchased a home and was not financially savvy. He purchased the home for $408,000. He put $4,000 down and financed the rest of the purchase with two mortgages. The first was for approximately $367,000. The second was for approximately $50,000. He believed that the first mortgage had a fixed-interest rate at the time he signed the loan documentation. However, in January 2008, the monthly payments due on the first mortgage doubled from $2,200 to $4,400. At that time, he learned he had an adjustable rate mortgage. In July 2008, the interest rates on the first mortgage adjusted again, and his payments went up to $8,800 per month. His second mortgage also had adjustable interest rates. When the interest rates increased, he could no longer afford to make his payments. He attempted to refinance the property, but the refinance applications were denied because he owed more on the loans than the property was worth. Applicant abandoned the home in December 2008. He provided documentation from the creditors of both the first and second mortgages that shows he owes nothing further on either mortgage. $408,000	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 is indebted on a judgment in the amount of $948 (as alleged in SOR ¶ 1.a). This debt was for unpaid community association dues. Applicant presented documentation from the court that acknowledges satisfaction of the judgment. This debt is satisfied.

$948

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

Applicant was indebted on a collection account in the amount of $4,520 (as alleged in SOR ¶ 1.b). This debt was for a water softener system that Applicant installed in his former home. Applicant provided a letter from this creditor that acknowledged Applicant agreed to make payments of $100 per month for 31 months, beginning February 15, 2013. Applicant provided documentation showing he made two timely payments to this creditor according to the agreement. Applicant is addressing this debt.

$4,520

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

Payment Plan with Creditor

1.c

Applicant was indebted on a delinquent medical debt in the amount of $107 (as alleged in SOR ¶ 1.c). Applicant produced a letter from this creditor that indicated Applicant “completely satisfied [his] obligation to our office.” This debt is satisfied.

$107

For Applicant

Medical Debt

Denied

—

Documented

Debt Paid in Full

1.d

Applicant was indebted on a collection account in the amount of $627 (as alleged in SOR ¶ 1.d). This debt was for a cell phone and became delinquent when Applicant was unemployed. Applicant provided a letter from the collection agent that shows this debt is paid in full. This debt is satisfied.

$627

For Applicant

Unspecified Financial

Denied

—

Documented

Debt Paid in Full

1.e

Applicant is indebted on a collection account in the amount of $3,058 (as alleged in SOR ¶ 1.e). This debt is a duplicate of SOR ¶ 1.b. Applicant is making payments on this debt, as set out above.

$3,058

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

Payment Plan with Creditor

1.f

Applicant was indebted on a collection account for a wireless cable bill in the amount of $622 (as alleged in SOR ¶ 1.f). Applicant provided a letter from the collection agent that shows this debt is paid in full. This debt is satisfied.

$622

For Applicant

Unspecified Financial

Denied

—

Documented

Debt Paid in Full

1.g

Applicant was indebted on a collection account in the amount of $109 (as alleged in SOR ¶ 1.g). This debt was for a personal loan. A letter from the creditor indicated that this debt was paid in full on February 8, 2013.

$109

For Applicant

Personal Loan Debt

Denied

—

Documented

Debt Paid in Full

1.h

Applicant was indebted on a collection account in the amount of $3,730 (as alleged in SOR ¶ 1.h). Applicant provided a letter from this creditor that acknowledged he agreed to make payments of $100 per month. Applicant provided documentation showing he made two timely payments to this creditor according to the agreement. Applicant is addressing this debt.

$3,730

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

Payment Plan with Creditor

1.i

Applicant was indebted on a vehicle that was repossessed in the amount of $23,248 (as alleged in SOR ¶ 1.i). Applicant contacted the creditor to arrange payments and learned that this debt was part of a class action suit against the creditor. The creditor informed Applicant by letter dated April 23, 2013, that as part of the settlement of the suit Applicant’s account had been closed and the deficiency was deleted from Applicant’s credit report. This debt is resolved.

$23,248

For Applicant

Auto Loan Debt

Denied

—

1.j

Applicant was indebted on a collection account in the amount of $528 (as alleged in SOR ¶ 1.j). This debt was for an unpaid dental bill. Applicant produced a letter from this creditor showing this debt is paid in full. This debt has been satisfied.

$528

For Applicant

Medical Debt

Denied

—

Documented

Debt Paid in Full

1.k

Applicant was indebted on a collection account in the amount of $1,413 (as alleged in SOR ¶ 1.k). This debt was for a time-share property that Applicant purchased in 2003. He was unable to make payments on this property when he was unemployed and the debt became delinquent. Applicant produced an account statement showing this debt as “$0 past due” and “$0 current balance.” This debt is resolved.

$1,413

For Applicant

Unspecified Financial

Denied

—

1.l

Applicant was indebted on a collection account in the amount of $170 (as alleged in SOR ¶ 1.l). This debt was for cable television services. Applicant produced a letter from this creditor showing this debt was paid in full on February 7, 2013. This debt is resolved.

$170

For Applicant

Unspecified Financial

Denied

—

Documented

Debt Paid in Full

1.m

Applicant was indebted on a collection account in the amount of $393 (as alleged in SOR ¶ 1.m). This debt belonged to Applicant’s son, who bears the same name as Applicant. Applicant satisfied this debt on February 5, 2013.

$393

For Applicant

Unspecified Financial

Denied

—

Documented

Debt Paid in Full

1.n

Applicant was indebted on a collection account in the amount of $621 (as alleged in SOR ¶ 1.n). Applicant provided a letter from this creditor that stated this debt was a duplicate of the debt alleged above in SOR ¶ 1.f. This debt is satisfied.

$621

For Applicant

Unspecified Financial

Denied

—

Documented

Debt Paid in Full

1.o

Applicant’s home was foreclosed upon in December 2008 (as alleged in SOR ¶ 1.o). He purchased his home in January 2005. It was the first time he had purchased a home and was not financially savvy. He purchased the home for $408,000. He put $4,000 down and financed the rest of the purchase with two mortgages. The first was for approximately $367,000. The second was for approximately $50,000. He believed that the first mortgage had a fixed-interest rate at the time he signed the loan documentation. However, in January 2008, the monthly payments due on the first mortgage doubled from $2,200 to $4,400. At that time, he learned he had an adjustable rate mortgage. In July 2008, the interest rates on the first mortgage adjusted again, and his payments went up to $8,800 per month. His second mortgage also had adjustable interest rates. When the interest rates increased, he could no longer afford to make his payments. He attempted to refinance the property, but the refinance applications were denied because he owed more on the loans than the property was worth. Applicant abandoned the home in December 2008. He provided documentation from the creditors of both the first and second mortgages that shows he owes nothing further on either mortgage.

$408,000

For Applicant

Mortgage or Home Loan Debt

Denied

—

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

FINDINGS OF FACT

POLICIES

ANALYSIS

WHOLE PERSON CONCEPT

FORMAL FINDINGS

CONCLUSION

FOOTNOTES