ISCR Case 12-00383.h1

Case Headnote

ISCR Case No. 12-00383.h1

deniedDec 12, 2013· Hon. Rita C. O'Brien· hearing

Summary

A 32-year-old federal contractor was denied a security clearance under Guideline F (Financial Considerations) due to unresolved financial delinquencies totaling $229,995, including multiple judgments. The applicant's financial issues spanned several years, with the judge finding insufficient evidence of consistent, good-faith efforts to resolve them.

Specific allegations included a $2,264 rent judgment from 2012, a $589 utility judgment from 2011, and a $14,846 automobile loan judgment from 2008, all of which were subject to payment plans with varying degrees of adherence. Additionally, two credit card debts totaling $1,282 and $2,704 were unresolved, with the applicant disputing liability for both. A foreclosed mortgage from 2010, with a loan balance of $204,566, also remained a potential liability. Finally, a $3,744 automobile loan from a totaled vehicle was being addressed by her husband.

Despite a recent Chapter 7 bankruptcy filing, the judge viewed it as a last-minute attempt to address long-standing financial concerns. The persistent nature of the delinquencies and judgments, coupled with inconsistent resolution efforts, led to concerns about the applicant's reliability and judgment, resulting in the denial of her security clearance.

Why the Applicant Was Denied

Applicant has a history of financial delinquencies and judgments against her.
Applicant's financial issues have persisted for several years without consistent resolution efforts.
The recent Chapter 7 bankruptcy filing was viewed as an eleventh-hour attempt to address financial concerns.

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(b)appliedConditions Largely Beyond the Person's ControlApplicant's financial problems were exacerbated by her separation and periods of unemployment.
AG ¶ 20(c)appliedReceiving Counseling or Demonstrating Efforts to Resolve DebtsApplicant filed for Chapter 7 bankruptcy as an attempt to resolve her debts.

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.”
— AG ¶ 18

Procedural Posture

SOR issuedJul 17, 2013
Answer filed—
Hearing heldSep 25, 2013
Decision dateDec 12, 2013

Cite For

Denial of Security Clearance Due to Unresolved Financial Obligations
Impact of Financial History on Security Clearance Eligibility
Consideration of Recent Bankruptcy Filings in Security Clearance Decisions

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	Rent/judgment – allegation 1.a, $2,264. Payment Plan. The debt represents one month’s rent on the townhome where Applicant and her husband lived before they separated in 2011. When her husband left, Applicant could not afford the rent on her own. The creditor sued, and the court awarded the creditor a judgment in the amount of $2,264 in June 2012. Applicant stated in her Answer that the full balance as of August 2013 had been $3,165, but she was making $100 monthly payments, and had reduced the balance to $2,965. She provided documentation showing payments in June and July 2013. (GE 6; AE A; Tr. 30-34) $2,264	Against Applicant	Utility or Phone Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	Utility debt/judgment – allegation 1.b, $589. Payment Plan. The creditor sued Applicant in February 2011 for a delinquent electricity bill that was in Applicant and her spouse’s names. The court awarded a default judgment to the utility company in May 2011 for $589 plus $96 court costs. In her September 2011 security interview, Applicant stated she had made arrangements to pay $100 per month starting in November 2011. However, as of 2013, the debt was still delinquent. In March 2013, Applicant arranged a payment plan of $50 per month, to begin April 2013. She testified that she made payments in April and May 2013, a half-payment in June 2013, and no payments in July or August. (GE 2, 3, 7; AE B, E; Tr. 34-36, 63) $589	Against Applicant	Utility or Phone Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	Automobile Loan/judgment - allegation 1.c, $14,846. Payment Plan. In Applicant's interrogatory response, she stated that this loan was a joint debt for a car purchased in 2006. Applicant and her husband were unable to afford the payments. Since 2008, when they voluntarily surrendered the car, Applicant had been giving her husband her portion of the car payment and it was his responsibility to make the payment. The lender sued Applicant and her husband and was awarded a default judgment in December 2008 for $14,846. The lender garnished Applicant's bank account in the amount of approximately $600 in March 2013. A July 2013 letter from the creditor shows that Applicant and her husband were offered a payoff amount of $5,392. Applicant and her husband are paying $175 per month, with Applicant’s share being $75 per month. The $75 payments started June 15, 2013. (GE 2, 3, 8; AE C; Tr. 36-38, 58-62) $14,846	Against Applicant	Auto Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	Credit cards/judgment - allegation 1.d, $1,282. Disputes; Unresolved. Applicant’s credit reports show that she had two low-limit credit cards in her name from this lender, opened in early 2012, totaling $1,282. (GE 4, 5) Applicant testified that she was never contacted by the creditor about this debt. The creditor filed suit, and a hearing was held in June 2013, where the creditor was awarded a default judgment. She contacted the creditor in July 2013 by telephone to state that she disputes owing the debt, but she has not received any further information. She did not contact the credit agencies to dispute the debt. (GE 9; Tr. 38-40, 64-65) $1,282	Against Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	Credit card – allegation 1.e, $2,704. Disputes; Unresolved. Applicant’s credit report shows this is an individual account. She disputes owing the balance because she believes the account is closed, based on her May 2013 credit report. She called the creditor in July 2013 to dispute the debt. She did not contact the credit agencies to dispute the debt. Her credit report shows the account is closed because the creditor has charged it off as an uncollectible bad debt. The debt is not resolved. (GE 2; Tr. 39-40, 64-65) $2,704	Against Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	Mortgage - allegation 1.f, $204,566. Disputes; Foreclosed. Applicant’s marital home was foreclosed in 2010. She stated in her August 2013 Answer that she had contacted the lender but had not received information on any remaining liability for the debt. She received a December 2010 Internal Revenue Service Form 1099-A, which listed the loan balance of $204,566, and a fair market value of $103,000. It also notes that the borrower was “personally liable for repayment of the debt.” She provided a website printout showing that the home was listed as sold in August 2010 for $122,750. As of the August hearing, Applicant did not know if she was liable for a deficiency. (GE 3; AE D, I; Tr. 40-43) $204,566	Against Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	Automobile loan – allegation 1.g, $3,744. Payment Plan. Applicant and her husband bought a car. After an accident, the car was a total loss. The alleged amount is their remaining liability after the insurance payout. Applicant testified that the creditor contacted her husband in August 2013 and that he is making arrangements to pay the debt. (Tr. 43-44) $3,744	Against Applicant	Auto Loan Debt	Admitted	(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

Rent/judgment – allegation 1.a, $2,264. Payment Plan. The debt represents one month’s rent on the townhome where Applicant and her husband lived before they separated in 2011. When her husband left, Applicant could not afford the rent on her own. The creditor sued, and the court awarded the creditor a judgment in the amount of $2,264 in June 2012. Applicant stated in her Answer that the full balance as of August 2013 had been $3,165, but she was making $100 monthly payments, and had reduced the balance to $2,965. She provided documentation showing payments in June and July 2013. (GE 6; AE A; Tr. 30-34)

$2,264

Against Applicant

Utility or Phone Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.b

Utility debt/judgment – allegation 1.b, $589. Payment Plan. The creditor sued Applicant in February 2011 for a delinquent electricity bill that was in Applicant and her spouse’s names. The court awarded a default judgment to the utility company in May 2011 for $589 plus $96 court costs. In her September 2011 security interview, Applicant stated she had made arrangements to pay $100 per month starting in November 2011. However, as of 2013, the debt was still delinquent. In March 2013, Applicant arranged a payment plan of $50 per month, to begin April 2013. She testified that she made payments in April and May 2013, a half-payment in June 2013, and no payments in July or August. (GE 2, 3, 7; AE B, E; Tr. 34-36, 63)

$589

Against Applicant

Utility or Phone Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.c

Automobile Loan/judgment - allegation 1.c, $14,846. Payment Plan. In Applicant's interrogatory response, she stated that this loan was a joint debt for a car purchased in 2006. Applicant and her husband were unable to afford the payments. Since 2008, when they voluntarily surrendered the car, Applicant had been giving her husband her portion of the car payment and it was his responsibility to make the payment. The lender sued Applicant and her husband and was awarded a default judgment in December 2008 for $14,846. The lender garnished Applicant's bank account in the amount of approximately $600 in March 2013. A July 2013 letter from the creditor shows that Applicant and her husband were offered a payoff amount of $5,392. Applicant and her husband are paying $175 per month, with Applicant’s share being $75 per month. The $75 payments started June 15, 2013. (GE 2, 3, 8; AE C; Tr. 36-38, 58-62)

$14,846

Against Applicant

Auto Loan Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.d

Credit cards/judgment - allegation 1.d, $1,282. Disputes; Unresolved. Applicant’s credit reports show that she had two low-limit credit cards in her name from this lender, opened in early 2012, totaling $1,282. (GE 4, 5) Applicant testified that she was never contacted by the creditor about this debt. The creditor filed suit, and a hearing was held in June 2013, where the creditor was awarded a default judgment. She contacted the creditor in July 2013 by telephone to state that she disputes owing the debt, but she has not received any further information. She did not contact the credit agencies to dispute the debt. (GE 9; Tr. 38-40, 64-65)

$1,282

Against Applicant

Credit Card Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.e

Credit card – allegation 1.e, $2,704. Disputes; Unresolved. Applicant’s credit report shows this is an individual account. She disputes owing the balance because she believes the account is closed, based on her May 2013 credit report. She called the creditor in July 2013 to dispute the debt. She did not contact the credit agencies to dispute the debt. Her credit report shows the account is closed because the creditor has charged it off as an uncollectible bad debt. The debt is not resolved. (GE 2; Tr. 39-40, 64-65)

$2,704

Against Applicant

Credit Card Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.f

Mortgage - allegation 1.f, $204,566. Disputes; Foreclosed. Applicant’s marital home was foreclosed in 2010. She stated in her August 2013 Answer that she had contacted the lender but had not received information on any remaining liability for the debt. She received a December 2010 Internal Revenue Service Form 1099-A, which listed the loan balance of $204,566, and a fair market value of $103,000. It also notes that the borrower was “personally liable for repayment of the debt.” She provided a website printout showing that the home was listed as sold in August 2010 for $122,750. As of the August hearing, Applicant did not know if she was liable for a deficiency. (GE 3; AE D, I; Tr. 40-43)

$204,566

Against Applicant

Mortgage or Home Loan Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.g

Automobile loan – allegation 1.g, $3,744. Payment Plan. Applicant and her husband bought a car. After an accident, the car was a total loss. The alleged amount is their remaining liability after the insurance payout. Applicant testified that the creditor contacted her husband in August 2013 and that he is making arrangements to pay the debt. (Tr. 43-44)

$3,744

Against Applicant

Auto Loan Debt

Admitted

(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 ANALYSIS

FORMAL FINDINGS

CONCLUSION