ISCR Case 12-02449.h1

Case Headnote

ISCR Case No. 12-02449.h1

deniedMar 26, 2014· Hon. Wilford H. Ross· hearing

Summary

A 48-year-old defense contractor was denied a security clearance under Guideline F (Financial Considerations) due to significant and long-standing financial issues. The applicant had over $130,000 in unpaid debts and recently filed for Chapter 13 bankruptcy. The judge determined that these financial difficulties, which have persisted since at least 2011, raised concerns about the applicant's reliability and trustworthiness.

Specific allegations included a Chapter 7 bankruptcy filing in 1997, attributed to a failed business and home repairs after a natural disaster. More recent debts included approximately $1,460, $20,915, $12,172, and $14,863 owed to various creditors. Additionally, the applicant was delinquent on a Home Equity Line of Credit (HELOC) for approximately $6,164 and on the first mortgage for his family residence for approximately $43,295; both of these were included in his approved Chapter 13 bankruptcy plan. The applicant disputed two smaller debts, believing they were either duplicates or part of other listed debts.

Despite the Chapter 13 filing, the judge found insufficient evidence of rehabilitation or control over the applicant's financial issues. The decision highlighted the applicant's poor financial judgment and the unresolved nature of his financial difficulties, leading to the denial of the security clearance.

Why the Applicant Was Denied

Applicant has over $130,000 in unpaid unsecured debts, raising security concerns.
Applicant's financial difficulties have persisted since at least 2011, indicating poor financial judgment.
The judge found insufficient evidence of rehabilitation or control over financial issues despite the Chapter 13 bankruptcy filing.

Conditions Referenced

Disqualifying

AG ¶ 19(a)raisedInability or Unwillingness to Satisfy Debts
AG ¶ 19(b)raisedIndebtedness Caused by Frivolous or Irresponsible Spending
AG ¶ 19(c)raisedHistory of Not Meeting Financial Obligations
AG ¶ 19(e)raisedConsistent Spending Beyond One’s Means

Mitigating

AG ¶ 20(a)rejectedBehavior Happened so Long Ago or InfrequentlyThe applicant's financial issues are recent and ongoing.
AG ¶ 20(b)rejectedConditions Largely Beyond the Person's ControlThe applicant admitted to living beyond his means during a period of higher income.
AG ¶ 20(d)rejectedGood-faith Effort to Repay Overdue CreditorsThe applicant's bankruptcy filing was too recent to demonstrate a reliable repayment plan.

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.”

Procedural Posture

SOR issuedSep 11, 2013
Answer filedNov 11, 2013
Hearing heldFeb 13, 2014
Decision dateMar 26, 2014

Cite For

Financial Overextension as a Disqualifying Condition Under Guideline F
Insufficient Evidence of Rehabilitation in Financial Matters
Impact of Long-standing Financial Issues on Security Clearance Eligibility

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 admits that he filed for Chapter 7 bankruptcy in 1997. His unsecured debts were discharged in February 1998. According to Applicant this bankruptcy was primarily caused by the failure of a business his wife was running, as well as costs connected to repairing his home after a natural disaster in 1994.	For Applicant	Bankruptcy Filing	Admitted	—	—	—
1.b	Applicant admits that he is indebted to a creditor for a debt in the amount of approximately $1,460. Applicant stated that he was not sure whether this debt was included in his Chapter 13 plan. $1,460	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.c	Applicant admits that he is indebted to a creditor for a debt in the amount of approximately $20,915. $20,915	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.d	Applicant admits that he is indebted to a creditor for a debt in the amount of approximately $12,172. $12,172	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.e	Applicant admits that he is indebted to a creditor for a delinquency on a HELOC in the amount of approximately $6,164. This debt is specifically included in the approved Chapter 13 bankruptcy plan, in the amount stated, which I take to be correct. $6,164	Against Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.f	Applicant denies that he is indebted to a creditor for a debt in the amount of approximately $1,291. He believes this may be the same debt as that set forth in allegation 1.b. $1,291	Against Applicant	Unspecified Financial	Denied	—	—	—
1.g	Applicant admits that he is indebted to a creditor for a delinquency on the first mortgage on his family residence in the amount of approximately $43,295. This debt is specifically included in the approved Chapter 13 bankruptcy plan, in the amount stated, which I take to be correct. $43,295	Against Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.h	Applicant admits that he is indebted to a creditor for a debt in the amount of approximately $14,863. $14,863	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	—	—
1.i	Applicant denies that he is indebted to a creditor for a debt in the amount of approximately $1,893. He believes this may be part of the debt set forth in allegation 1.c. $1,893	Against Applicant	Unspecified Financial	Denied	—	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

Applicant admits that he filed for Chapter 7 bankruptcy in 1997. His unsecured debts were discharged in February 1998. According to Applicant this bankruptcy was primarily caused by the failure of a business his wife was running, as well as costs connected to repairing his home after a natural disaster in 1994.

For Applicant

Bankruptcy Filing

Admitted

—

1.b

Applicant admits that he is indebted to a creditor for a debt in the amount of approximately $1,460. Applicant stated that he was not sure whether this debt was included in his Chapter 13 plan.

$1,460

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

1.c

Applicant admits that he is indebted to a creditor for a debt in the amount of approximately $20,915.

$20,915

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

1.d

Applicant admits that he is indebted to a creditor for a debt in the amount of approximately $12,172.

$12,172

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

1.e

Applicant admits that he is indebted to a creditor for a delinquency on a HELOC in the amount of approximately $6,164. This debt is specifically included in the approved Chapter 13 bankruptcy plan, in the amount stated, which I take to be correct.

$6,164

Against Applicant

Mortgage or Home Loan Debt

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

1.f

Applicant denies that he is indebted to a creditor for a debt in the amount of approximately $1,291. He believes this may be the same debt as that set forth in allegation 1.b.

$1,291

Against Applicant

Unspecified Financial

Denied

—

1.g

Applicant admits that he is indebted to a creditor for a delinquency on the first mortgage on his family residence in the amount of approximately $43,295. This debt is specifically included in the approved Chapter 13 bankruptcy plan, in the amount stated, which I take to be correct.

$43,295

Against Applicant

Mortgage or Home Loan Debt

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

1.h

Applicant admits that he is indebted to a creditor for a debt in the amount of approximately $14,863.

$14,863

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

(c) a history of not meeting financial obligations

—

1.i

Applicant denies that he is indebted to a creditor for a debt in the amount of approximately $1,893. He believes this may be part of the debt set forth in allegation 1.c.

$1,893

Against Applicant

Unspecified Financial

Denied

—

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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