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ISCR Case 12-02820.h1 — CASE

ISCR Case 12-02820.h1granted

Case Headnote

ISCR Case No. 12-02820.h1

grantedJul 17, 2014· Hon. Elizabeth M. Matchinski· hearing

Summary

A 60-year-old defense industry employee's security clearance was granted despite initial concerns under Guideline F (Financial Considerations). The applicant faced financial difficulties, including an adjustable-rate mortgage that led to foreclosure, and had delinquent debts totaling $17,647.

Specific allegations included a $232 municipal tax lien, a $291 utility debt, a $329 wireless telephone debt, a $700 retail charge balance, and a $518 charged-off debt, all of which were resolved. Additionally, a $1,454 charged-off credit card balance and an $1,182 credit card debt were resolved. A $13,474.67 judgment was settled for $6,691.41. Two medical and credit card debts, totaling $110 and $594 respectively, were disputed due to an inability to verify them.

The clearance was granted because the applicant resolved multiple delinquent debts after receiving the Statement of Reasons, demonstrating a willingness to address her financial obligations and live within her means. Her financial issues were largely attributed to circumstances beyond her control, such as the loss of a cohabitant's financial support.

Why the Applicant Prevailed

The applicant resolved multiple delinquent debts after receiving the SOR.
She demonstrated a willingness to address her financial obligations and live within her means.
The applicant's financial issues were largely due to circumstances beyond her control, such as the loss of a cohabitant's financial support.

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, Was Infrequent, or Unlikely to Recur
AG ¶ 20(b)appliedConditions Resulting in Financial Problems Were Largely Beyond the Person's Control

Key Rule Quoted

“The protection of the national security is the paramount consideration.”

Procedural Posture

SOR issuedFeb 4, 2014
Answer filedMar 10, 2014
Hearing heldJun 5, 2014Record held open until July 3, 2014.
Decision dateJul 10, 2014

Cite For

Mitigating Conditions Under Guideline F Due to Financial Hardship
Resolution of Debts as a Factor in Security Clearance Decisions
Impact of Personal 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.

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: Decision on RecordDecided: granted

The judge found that the applicant had a history of financial difficulties, including multiple delinquent debts totaling $17,647. However, the applicant successfully resolved several debts and demonstrated a commitment to managing her finances, leading to a decision to grant her security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	$232 municipal tax lien placed against her property in March 2006, paid in February 2007. $232	For Applicant	Tax Filing Failure	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	—
1.b	$291 utility debt placed for collection in December 2012, satisfied with a payment of $265.88 in September 2013. $291	For Applicant	Utility or Phone Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	—
1.c	$110 medical debt in collection since September 2005, disputed due to inability to verify the debt. $110	For Applicant	Tax Unpaid	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	$329 wireless telephone debt in collection since February 2007, satisfied in full by April 21, 2014. $329	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	—
1.e	$700 retail charge balance in collection since June 2008, settled in April 2014. $700	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	—
1.f	$518 debt from April 2006 that was charged off in October 2008, settled in full by February 2014. $518	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	—
1.g	$594 credit card balance in collection since August 2011, disputed due to inability to verify the debt. $594	For Applicant	Tax Unpaid	Denied	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	$1,454 credit card balance from July 2006 that was charged off and sold to a collection agency in April 2007, resolved in March 2014. $1,454	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	—
1.i	$1,182 credit card debt from January 2006 that was paid in April 2007, resolved in March 2014. $1,182	For Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	—
1.j	$13,474.67 judgment obtained against her in September 2011, settled for $6,691.41 in June 2014. $13,474	For Applicant	Judgment Against Applicant	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(a) behavior happened long ago / infrequent / unlikely to recur	—

Descriptive standardized rendering of a decided public case (Guideline F). The verbatim source decision is shown in full below.

Full decision

The complete, official text — footnotes and signatures included — is in the original PDF.

Decision text, by section

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

APPEARANCES

DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS

In the matter of: ) ) ) ISCR Case No. 12-02820 ) Applicant for Security Clearance )

For Government: Stephanie C. Hess, Esq., Department Counsel For Applicant: Brian W. Leahey, Esq.

07/17/2014 ______________

STATEMENT OF CASE

______________

MATCHINSKI, Elizabeth M., Administrative Judge:

Applicant struggled to afford her mortgage after her monthly payment increased due to its adjustable interest rate. She became delinquent on some debts while trying to save her home, which was taken in foreclosure and then sold around September 2012. Applicant has satisfied or settled those debts she was able to verify, and she lives within her means. Clearance is granted.

Statement of the Case

On February 4, 2014, the Department of Defense Consolidated Adjudications Facility (DOD CAF) issued a Statement of Reasons (SOR) to Applicant, detailing the security concerns under Guideline F, Financial Considerations, and explaining why it was unable to find it clearly consistent with the national interest to grant or continue a security clearance for her. The DOD CAF took the action under Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as amended; Department of Defense (DOD) Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) effective within the DOD on September 1, 2006. Applicant responded to the SOR allegations on March 10, 2014, and she requested a hearing before an administrative judge from the Defense Office of Hearings and Appeals (DOHA). By letter dated March 31, 2014, Department Counsel provided discovery of the potential Government exhibits (GEs) to Applicant’s counsel. On May 13, 2014, the case was assigned to me to conduct a hearing to determine whether it is clearly consistent with the national interest to grant or continue a security clearance for Applicant. On May 15, 2014, I scheduled a hearing for June 5, 2014.

I convened the hearing as scheduled. Four Government exhibits (GEs 1-4) and 12 Applicant exhibits (AEs A-L) were admitted into evidence without objection. Applicant testified, as reflected in a transcript (Tr.) received on June 16, 2014. At Applicant’s request and with no objection from the Government, the record was held open until July 3, 2014, for her to submit proof of efforts to resolve the debt in SOR 1.j.1 On June 30, 2014, Applicant forwarded, through her attorney, AE M, to which the Government did not object. Accordingly, the document was accepted into evidence. The record closed on receipt of the Government’s response on July 10, 2014.

Summary of SOR Allegations

The SOR alleges under Guideline F that as of February 4, 2014, Applicant owed $17,647 in delinquent debt (SOR 1.a-1.j), including two consumer credit debts of $2,240 (SOR 1.i) and $12,712 (SOR 1.j). When she answered the SOR allegations, Applicant denied the debts identified in SOR 1.a-1.d, and 1.g. The debts alleged in SOR 1.a and 1.bhad been paid, and the debts in SOR 1.c, 1.d, and 1.gcould not be verified. Applicant admitted the remaining allegations, but indicated that she resolved the debts in SOR 1.e, 1.f, 1.h, and 1.i. after she received the SOR. Her attorney had since advised her to make no voluntary repayments on debts that are legally unenforceable, and so she had not made any arrangements to address the debt in SOR 1.j. She expressed a willingness to address the debt in SOR 1.jif required by the DOD.

FINDINGS OF FACT

After considering the pleadings, exhibits, and transcript, I make the following findings of fact.

Applicant is a 60-year-old high school graduate. (GE 1; Tr. 20.) Married and divorced three times by January 1988, Applicant had a daughter in 1975 with her first husband and a son in 1984 with her second husband. (GEs 1, 2.)

Applicant started her career in the defense industry as a documentation specialist in 1977. In 1984, Applicant resigned from her job to care for her newborn son. (Tr. 22-23.) Around 1986, Applicant returned to work, as a documentation specialist with a different defense contractor. In December 1997, Applicant began working as a media production specialist for her current defense contractor employer. She has been promoted over the last 16 years to administrative specialist, then technical support specialist, and most recently senior technical support specialist. (GEs 1, 2; Tr. 25-26.) Applicant has held a security clearance throughout most of her career in the defense industry with no security infractions or violations. (Tr. 23-24.)

In 2003, Applicant sold the home that had been her residence for approximately 10 years, and she bought a new home through a mortgage of $204,000. Applicant sold that property around May 2004 because she did not like the neighborhood, and she moved into a home that she mortgaged for $235,000 after a $50,000 down payment. (GEs 1, 4; Tr. 93.) The loan had a fixed interest rate for the first two years and an adjustable rate thereafter. (Tr. 30-31.) Applicant and her then cohabitant boyfriend split household expenses, including the monthly mortgage payments. (Tr. 31.)

In 2006, Applicant and her boyfriend terminated their relationship, around the time that her monthly mortgage obligation increased by $600 to almost $3,000. Applicant began to struggle financially without his $2,000 monthly contribution to the household expenses. In an effort to keep her home, she gave priority to paying her mortgage. Some accounts became delinquent, including her water bill. In March 2006, the town placed a $232.99 tax lien against her property (GEs 2, 4; AEs J, K), which she paid in February 2007. (AE B.) Applicant was able to lower her monthly mortgage payment to $2,250 through a December 2007 refinancing, but that obligation was also ultimately unaffordable. (GE 2; Tr. 32-34.)

Due for an update of her security clearance eligibility, Applicant completed and certified to the accuracy of an Electronic Questionnaire for Investigations Processing (e- QIP) on November 7, 2011. In response to any financial delinquencies involving enforcement, Applicant indicated that a collection agency had attached her property in August 2008 to collect a $13,800 debt (SOR 1.j).2 In addition, a creditor had obtained a $1,223 judgment in November 2008 that she was repaying at $25 a month (not in SOR).3 She also disclosed delinquencies on routine accounts: a $1,182 credit card debt from January 2006 that she paid in April 2007; a $518 debt from April 2006 that was charged off in October 2008 (SOR 1.f); a $995 debt settled on her payment of $354 in July 2006 (not in SOR); a $1,454 credit card balance from July 2006 that was charged off and sold to a collection agency in April 2007 (SOR 1.i); and a $1,404 credit card debt from August 2006 in collection and being repaid at $25 a month (not in SOR). She expressed a hope to address the credit card delinquency in SOR 1.i when contacted by the collection agency. Applicant attributed her financial problems to her high mortgage payments, which caused her to fall behind on other debts. (GE 1.)

As of December 2011, Applicant’s credit reports showed additional delinquencies: a $232 municipal tax lien (SOR 1.a); a $329 wireless telephone debt in collection since February 2007 (SOR 1.d); a $700 retail charge balance in collection since June 2008 (SOR 1.e); a $594 credit card balance in collection since August 2011 (SOR 1.h), and a $110 medical debt in collection since September 2005 (SOR 1.g). (GE 4.) On January 11, 2012, Applicant was interviewed about her debts by an authorized investigator for the Office of Personnel Management (OPM). Applicant confirmed the accuracy of the financial delinquency information on her e-QIP, and she recalled no other unpaid past-due debts. When confronted about the other past-due debts on her credit record, Applicant asserted that she had paid off the municipal tax lien (SOR 1.a). She did not recognize the collection debt in SOR 1.d, and explained that the debts in SOR 1.e and 1.fhad been charged off. Applicant mistakenly averred (see footnote 3, supra) that she repaying the debt in SOR 1.hat $25 per month. She had not been contacted about a second consumer credit debt (SOR 1.i), reportedly held by the same assignee. Concerning her largest collection debt (SOR 1.j), Applicant indicated that the lender demanded a lump sum payment, which she could not afford. She explained that she was waiting for her home’s value to increase so that she could refinance her mortgage for the funds to address this debt and the credit card debt in SOR 1.i. (GE 2.)

Applicant was re-contacted on February 7, 2012, by the investigator to clarify some of her past-due accounts. She indicated that she would look into several accounts reported as outstanding delinquencies on her credit record (SOR 1.a, 1.d-1.j). (GE 2.)

Applicant made no payments on her mortgage after January 2012. Her lender foreclosed on her loan, and around August 2012, took possession of the home. (GE 2; AEs J, K.) According to the Form 1099-A issued by the lender, the loan’s principal balance was $226,512.24, about $31,512 over the home’s fair market value. (GE 2.) Applicant moved in with her sister, and she was not pursued for any deficiency balance on the mortgage. (Tr. 35, 90-91.) The home was sold in September 2012. (Tr. 65.)

In December 2012, Applicant had a $291 utility debt (SOR 1.b) and a $553 cable debt (not in SOR) placed for collection. Applicant made some payments to reduce the utility debt to $265.88 by March 2013 and the cable debt to $393 as of January 2013, but she made no further payments on the debts until mid-September 2013. (AE C.) A $30 debt from January 2010 for a missed appointment went unpaid. (Tr. 39-40.) In September 2013, Applicant satisfied the $1,223 judgment (not in SOR) with a final payment of $884.19; the utility debt (SOR 1.b) with a payment of $265.88; the delinquent cable debt (not in SOR); and the $30 medical debt (not in SOR). (GE 2; AE C; Tr. 46-47.)

In response to DOD CAF inquiries about her delinquent accounts, Applicant indicated on September 30, 2013, that she had also paid the $266 past-due utility balance (SOR 1.a) and two medical debts in collection, including the $30 medical debt. About her mortgage, Applicant indicated that she fell behind in March 2013 [sic]. Unable to afford her living expenses, she “had to make the decision to walk away and go into foreclosure.” Applicant completed a Personal Financial Statement on which she reported net monthly income of $1,373.51 after wage deductions (including bi-weekly payments of $40.40 and $45.87 on two loans);4 $1,375 in monthly expenses (including rent of $675); and $148.95 in debt payments. She reported $14,000 in bank savings. (GE 2.)

Applicant has had no success verifying the medical debts alleged in SOR 1.cand 1.g. Applicant did not recognize either creditor and neither her physician nor a local hospital reported any outstanding balances. She is willing to pay the debts if able to identify the creditors. (Tr. 48-49, 56-57.) As of February 25, 2014, of the three credit reporting agencies, only Equifax was reporting the debt in SOR 1.con Applicant’s credit record. Equifax did not name the alleged creditor, and the information about the account was old (as of July 2012). The $110 medical debt in collection as of November 2005 is not on the recent credit reports. (GE 3; AEs J, K.) Applicant was making timely payments on about $2,175 in revolving charge card balances. (AE J.) On February 25, 2014, Applicant paid $371.95 to settle in full the debt in SOR 1.f. (AE F; Tr. 95.) Around March 6, 2014, Applicant resolved the collection debts in SOR 1.hand 1.i. (AEs G, H; Tr. 58-61.) After Applicant contacted the assignee holding the wireless debt in SOR 1.d, she received a bill for the debt. She settled the $329 debt in full by April 21, 2014. (AE D; Tr. 50-51.) Around April 9, 2014, she settled the retail charge debt alleged in SOR 1.e. (AE E; Tr. 52-53.)

Applicant’s attorney, whom she retained after receiving the SOR, advised her to not pay the debt in SOR 1.jbecause it was legally unenforceable. The assignee holding the debt had placed a lien on her home, which she believed was extinguished on the sale of the property in 2012. (Tr. 63-66.) In May 2014, Applicant authorized her attorney to negotiate with the assignee to resolve the debt. (AEs I, M; Tr. 66-67.) On June 19, 2014, Applicant accepted a settlement offer from the assignee. On June 23, 2014, she paid $6,691.41 to settle the $14,256.88 balance and release the judgment lien. (AE M.)

As of May 28, 2014, Applicant had 14 open credit card accounts,5 which were rated as current: two opened in 2011 with balances of $387 and $296; one opened in July 2012 with a zero balance; and 11 opened between March 2013 and September 2013 to rebuild her credit. Only two of the 11 accounts had balances, of $218 and $150. As of June 5, 2014, she had made payments to reduce her aggregate credit card balance from $1,051 to $753. (Tr. 83-84.) In March 2013, Applicant took out a three-year unsecured loan of $1,500 from the credit union at work. She made her $54 monthly payments on time to reduce the loan balance to $982 as of late May 2014. (AE K.) There is no evidence that Applicant has completed any financial counseling.

Applicant has about $1,000 each month after she pays her routine expenses. She is rebuilding her savings with the extra funds. (Tr. 82-83.) As of early June 2014, she had about $600 in savings on deposit. (Tr. 87.) Applicant intends to remain current in her financial obligations to avoid a recurrence of “the worst time in [her] life.” (Tr. 81.)

Applicant’s work performance met her employer’s requirements in 2013. Requiring little or no supervision and guidance, Applicant demonstrated “a great work ethic.” She was able to produce quality work with attention to detail while also being flexible when priority updates were needed. Her supervisor considers her to be one of the most important assets for the team. (AE A.)

POLICIES

The U.S. Supreme Court has recognized the substantial discretion the Executive Branch has in regulating access to information pertaining to national security, emphasizing that “no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are required to be considered in evaluating an applicant’s eligibility for access to classified information. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, these guidelines are applied in conjunction with the factors listed in the adjudicative process. The administrative judge’s overall adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(c), the entire process is a conscientious scrutiny of a number of variables known as the “whole-person concept.” The administrative judge must consider all available, reliable information about the person, past and present, favorable and unfavorable, in making a decision.

The protection of the national security is the paramount consideration. AG ¶ 2(b) requires that “[a]ny doubt concerning personnel being considered for access to classified information will be resolved in favor of national security.” In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence contained in the record. Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the applicant is responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by applicant or proven by Department Counsel. . . .” The applicant has the ultimate burden of persuasion to obtain a favorable security decision.

A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence. This relationship transcends normal duty hours and endures throughout off-duty hours. The Government reposes a high degree of trust and confidence in individuals to whom it grants access to classified information. Decisions include, by necessity, consideration of the possible risk that the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation about potential, rather than actual, risk of compromise of classified information. Section 7 of Executive Order 10865 provides that decisions shall be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information).

ANALYSIS

Guideline F, Financial Considerations

The security concern about financial considerations is set forth in AG ¶ 18:

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. An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds.

The SOR alleges 10 delinquent accounts, totaling $17,647 in outstanding debt as of February 4, 2014. Applicant does not dispute that she fell behind on the accounts in SOR 1.a-1.b, 1.d-1.f, and 1.h-1.j. Applicant disputes the medical debt balances in SOR 1.cand 1.gbecause she could not verify the debts. AG ¶ 20(e), “the individual has a reasonable basis to dispute the legitimacy of the past-due debt which is the cause of the problem and provides documented proof to substantiate the basis of the dispute or provides evidence of actions to resolve the issue,” is satisfied as to the disputed medical debts in that her liability was not proven. AG ¶ 20(e) does not apply to the admitted delinquencies. Applicant had resolved the municipal tax lien (SOR 1.a) in February 2007, and the utility debt in collection (SOR 1.b) in September 2013, before the SOR was issued. Even so, Applicant owed past- due balances totaling about $18,291 on six accounts (SOR 1.d-1.fand 1.h-1.j) as of the date of the SOR. The evidence shows that Applicant’s outstanding liability on the collection debt in SOR 1.jexceeded the $12,712 alleged. The assignee collecting the debt obtained a judgment of $13,474.67 against her in September 2011. With interest, the balance had accrued to approximately $14,000 on the judgment. AG ¶ 19(a), “inability or unwillingness to satisfy debts,” and AG ¶ 19(c), “a history of not meeting financial obligations,” are established by Applicant’s record of financial delinquency.

Concerning the mitigating conditions, AG ¶ 20(a), “the behavior happened so long ago, was so infrequent, or occurred under circumstances that it is unlikely to recur and does not cast doubt on the individual’s current, reliability, or good judgment,” applies to the tax lien (SOR 1.a) because it was issued in March 2006 and paid in February 2007, more than seven years ago. However, other debts that also became delinquent more than five years ago (SOR 1.d-1.f, 1.i-1.j) were not resolved until the spring of 2014. Her financial problems may have started “so long ago,” but her failure to address them in a timely manner precludes full mitigation under AG ¶ 20(a).

Applicant’s financial problems started when her former boyfriend moved out. She lost his $2,000 monthly contribution to the household around the time her monthly mortgage obligation increased. Applicant chose to execute a mortgage subject to interest rate adjustments after the first two years, but the breakup of her personal relationship was an unforeseen circumstance that negatively affected her finances. AG ¶ 20(b) is implicated as to the cause of her financial issues:

(b) the conditions that resulted in the financial problem were largely beyond the person’s control (e.g., loss of employment, a business downturn, unexpected medical emergency, or a death, divorce or separation), and the individual acted responsibly under the circumstances.

Yet, AG ¶ 20(b) also requires that an individual act responsibly to deal with financial setbacks. Applicant refinanced her mortgage in late 2007 to lower her monthly payment, but it was not enough to eliminate the financial strain. Her decision to then give her mortgage priority over paying some consumer credit debts is understandable. However, Applicant last paid her mortgage in January 2012. No longer saddled with a $2,250 monthly mortgage obligation, Applicant should have had some funds available to make payments on her delinquent debts. In September 2013, Applicant reported net monthly income of $1,373 after expenses. Many of her past-due debts went unpaid until March or April 2014, after they became an issue for her security clearance. A good-faith belief that the judgment lien against her home (SOR 1.j) had been extinguished on the foreclosure sale would credibly explain her inaction on that debt, but Applicant had known about other outstanding delinquencies (e.g., SOR 1.i) since November 2011. She indicated that she hoped to work with the collection agency to resolve the credit card debt (SOR 1.i) after she was contacted. The debt was not paid until March 6, 2014. Applicant did not pay the debt in SOR 1.funtil February 25, 2014, apparently because it had been charged off, even though she had the income to make payments. AG ¶ 20(b) does not mitigate the financial judgment concerns raised by the reactive manner in which she handled her debt obligations.

Nevertheless, Applicant’s belated resolution of her verified debts implicates AG ¶ 20(c), “the 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,” and, to a lesser extent, AG ¶ 20(d), “the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts.” In September 2013, Applicant paid her delinquent utility (SOR 1.b) and cable company (not in SOR) debts. In late February 2014, she paid the debt in SOR 1.f. On March 6, 2014, Applicant resolved the debts in SOR 1.hand 1.i to the satisfaction of the creditor collecting the two accounts. In June 2014, she settled the $14,256.88 judgment balance of SOR 1.jwith a lump-sum payment of $6,691.41. The financial concerns are largely mitigated by her debt payments.

WHOLE PERSON CONCEPT

Under the whole-person concept, the administrative judge must consider the totality of an applicant’s conduct and all relevant circumstances in light of the nine adjudicative process factors in AG ¶ 2(a).6

One has to question Applicant’s financial judgment in executing a mortgage that was not affordable on her income alone. Her belated resolution of known delinquencies raises additional questions about her handling of her financial affairs. Yet, in Applicant’s favor, once it became clear to her that she had an ethical obligation to resolve debts that had been charged off or were otherwise no longer legally enforceable, she paid her debts in full or settled them on terms acceptable to her creditors. Without the financial burden of delinquent debt, Applicant is unlikely to engage in illegal acts to generate funds, but it does not end the inquiry. The Government must be assured that her financial problems are not likely to recur. The reports of Applicant’s credit since September 2013 (GEs 2, 3; AEs J, K) confirm that she is not continuing to incur delinquent debt. The large number (11) of retail consumer credit card accounts opened since March 2013 raises a potential risk of credit mismanagement, but Applicant has made timely payments on aggregate balances of $2,175 as of February 2014 and of $1,051 as of May 2014. The decrease in her overall debt balance reflects responsible credit management.

Furthermore, Applicant testified credibly to her understanding of the importance of maintaining good credit and of her intent to avoid a recurrence of financial delinquency in the future. Her present financial situation is stable, and she lives within her means. Applicant has worked in the defense industry for about 35 years, with her present employer since December 1997. She is not likely to jeopardize the employment which she needs to meet her present financial obligations by allowing accounts to become seriously delinquent in the future. After reviewing the facts and circumstances before me, I conclude that it is clearly consistent with the national interest to continue Applicant’s security clearance eligibility at this time.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by section E3.1.25 of Enclosure 3 of the Directive, are:

Paragraph 1, Guideline F: FOR APPLICANT Subparagraph 1.a: For Applicant Subparagraph 1.b: For Applicant Subparagraph 1.c: For Applicant Subparagraph 1.d: For Applicant Subparagraph 1.e: For Applicant Subparagraph 1.f: For Applicant Subparagraph 1.g: For Applicant Subparagraph 1.h: For Applicant Subparagraph 1.i: For Applicant Subparagraph 1.j: For Applicant

CONCLUSION

In light of all of the circumstances presented by the record in this case, it is clearly consistent with the national interest to grant or continue Applicant’s eligibility for a security clearance. Eligibility for access to classified information is granted.

___________________ Elizabeth M. Matchinski Administrative Judge

FOOTNOTES

1 The record was initially held open for three weeks. Applicant’s counsel provided updates about his efforts to obtain confirmation of debt resolution for SOR 1.j. On June 24, 2014, he requested guidance about whether to submit an affidavit or an offer to settle letter as proof of his client’s satisfaction of the debt. In response, I extended the deadline for post-hearing submissions to July 3, 2014, to which the Government did not object. The correspondence from Applicant’s counsel was included in the record, but was not marked as an exhibit. 2 Post-hearing documentation (AE M) indicates that the creditor obtained a $13,474.67 judgment against Applicant on September 15, 2011. With post-judgment interest, the debt accrued to $14,256.88 as of June 20, 2014.

3 When Applicant was interviewed about the accounts by the investigator for the OPM, she expressed her belief that the credit card account ending in x9153 (SOR 1.h) was the account reduced to judgment on which she was paying $25 a month. However, available credit information shows that the judgment was issued on a charge account opened with a retailer in March 2001. As of August 2006, that account, ending in x5898 and with a delinquent balance of $1,164, had been charged off and sold. The account ending in x5898 was not alleged in the SOR, presumably because the judgment was satisfied around September 2013. 4 Applicant’s income was based on 80 hours at an hourly rate of $31.27. (GE 2.)

5 Applicant testified that she has 12 open credit card accounts (Tr. 83, 88), but her credit reports of February 18, 2014 (AE J) and May 28, 2014 (AE K) show 14 open revolving charge accounts. About why she had so many open credit card accounts (12 of them opened with retailers), Applicant explained that it was to re- establish her credit. Lenders are better able to determine her ability to manage her spending if there are multiple accounts. As her credit score increases, she plans to acquire “a major credit card and get rid of the small ones.” (Tr. 89.) As of April 2014, Experian assessed her credit score at 700, up from 697 the previous month, and considered her to be a low risk. (AE L.) 6 The factors under AG ¶ 2(a) are as follows:

(1) the nature, extent, and seriousness of the conduct; (2) the circumstances surrounding the conduct, to include knowledgeable participation; (3) the frequency and recency of the conduct; (4) the individual’s age and maturity at the time of the conduct; (5) the extent to which participation is voluntary; (6) the presence or absence of rehabilitation and other permanent behavioral changes; (7) the motivation for the conduct; (8) the potential for pressure, coercion, exploitation, or duress; and (9) the likelihood of continuation or recurrence.