ISCR Case 12-04658.h1

Case Headnote

ISCR Case No. 12-04658.h1

grantedAug 20, 2014· Hon. Rita C. O'Brien· hearing

Summary

A 36-year-old woman with a bachelor's degree was granted a security clearance despite concerns under Guideline F (Financial Considerations). Her financial issues largely stemmed from the decline of a family business during a recession.

The Statement of Reasons detailed several financial obligations. These included a paid Internal Revenue Service debt of $145.22 for tax year 2011, and a condominium fee of $2,200 that was discharged in bankruptcy. Multiple credit card debts totaling $7,948, a $20,135 line of credit for business equipment, and a $73,405 home equity loan were also discharged through her Chapter 7 bankruptcy. Additionally, a $242,697 commercial property mortgage, which led to wage garnishment and foreclosure proceedings, was included in her bankruptcy petition. Unresolved debts included a medical debt and $5,908 in property taxes on a condominium, which was not part of the bankruptcy.

The judge determined that the applicant's financial difficulties were primarily due to circumstances beyond her control and that she took responsible steps to manage them, including seeking legal advice and filing for bankruptcy. She demonstrated current financial stability with a steady income and a positive monthly budget, leading to the conclusion that her financial issues were unlikely to recur and did not reflect poorly on her current reliability or judgment.

Why the Applicant Prevailed

The applicant's financial difficulties were primarily due to circumstances beyond her control, including a recession and family obligations.
She took responsible steps to manage her finances, including seeking legal advice and filing for bankruptcy when necessary.
The applicant demonstrated current financial stability with a steady income and a positive monthly budget.

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 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)appliedThe 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
AG ¶ 20(d)appliedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts

Key Rule Quoted

“A security clearance decision is issued only to resolve the question of whether it is clearly consistent with the national interest for an applicant to either receive or continue to have access to classified information.”
— Department of the Navy v. Egan, 484 U.S. 518 (1988)

Procedural Posture

SOR issuedFeb 21, 2014
Answer filedMar 14, 2014
Hearing heldJun 11, 2014via video teleconference
Decision dateAug 20, 2014

Cite For

Mitigation of Financial Issues Under Guideline F Due to External Circumstances
Demonstrating Responsible Financial Management Post-bankruptcy
The Importance of Current Financial Stability in Security Clearance Determinations

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	Internal Revenue Service, $3,691. Paid. Although Applicant did not have sufficient documentation to file a complete income tax return for tax year 2011, her accountant timely filed the return, which indicated Applicant owed $2,799. The amended return showed Applicant’s tax liability was reduced by $2,693. With about $40 in interest and penalties, Applicant owed an adjusted tax of $145.22. She provided evidence that the tax is paid. $3,691	For Applicant	Tax Unpaid	Admitted	—	(a) behavior happened long ago / infrequent / unlikely to recur	—
1.b	Condominium fee, $880. Included in bankruptcy petition. Applicant owed an annual condominium association fee in 2012 for her rental property. When she was informed the debt was $2,180, she thought the association had made an error. After contacting the creditor, she learned that it had filed two claims in two different county courts. However, in 2013, her attorney advised her not to pay the debt because of her pending bankruptcy filing. The current debt of $2,200 is discharged. $880	For Applicant	Unspecified Financial	Admitted	—	—	—
1.c	Medical debt - Unresolved; $139	For Applicant	Medical Debt	Admitted	—	—	—
1.d	Gym - included in bankruptcy petition. $249	For Applicant	Unspecified Financial	Admitted	—	—	—
1.e	totalling $7,948. Included in bankruptcy petition. Applicant and her husband used credit cards to pay business and family expenses. When finances were tight, she paid minimum amounts on the balances. She was able to bring some cards to a current status, but others became delinquent. She stopped paying on these balances, on her attorney’s advice. All were discharged through her bankruptcy. Applicant and her husband no longer use credit cards. $7,948	For Applicant	Credit Card Debt	Admitted	—	—	—
1.f	totalling $7,948. Included in bankruptcy petition. Applicant and her husband used credit cards to pay business and family expenses. When finances were tight, she paid minimum amounts on the balances. She was able to bring some cards to a current status, but others became delinquent. She stopped paying on these balances, on her attorney’s advice. All were discharged through her bankruptcy. Applicant and her husband no longer use credit cards. $7,948	For Applicant	Credit Card Debt	Admitted	—	—	—
1.i	totalling $7,948. Included in bankruptcy petition. Applicant and her husband used credit cards to pay business and family expenses. When finances were tight, she paid minimum amounts on the balances. She was able to bring some cards to a current status, but others became delinquent. She stopped paying on these balances, on her attorney’s advice. All were discharged through her bankruptcy. Applicant and her husband no longer use credit cards. $7,948	For Applicant	Credit Card Debt	Admitted	—	—	—
1.j	totalling $7,948. Included in bankruptcy petition. Applicant and her husband used credit cards to pay business and family expenses. When finances were tight, she paid minimum amounts on the balances. She was able to bring some cards to a current status, but others became delinquent. She stopped paying on these balances, on her attorney’s advice. All were discharged through her bankruptcy. Applicant and her husband no longer use credit cards. $7,948	For Applicant	Credit Card Debt	Admitted	—	—	—
1.k	Line of credit loans. Included in bankruptcy petition. In 2005 or 2006, Applicant opened a line of credit for business equipment. In 2013, it was delinquent, with a balance of $20,135 (allegation 1.k). She also obtained a home equity loan of $73,405 in 2002 (allegation 1.l). It was 120 days delinquent as of August 2013. Both loans are discharged in her bankruptcy petition. $20,135	For Applicant	Unspecified Financial	Admitted	—	—	—
1.l	Line of credit loans. Included in bankruptcy petition. In 2005 or 2006, Applicant opened a line of credit for business equipment. In 2013, it was delinquent, with a balance of $20,135 (allegation 1.k). She also obtained a home equity loan of 73,405 in 2002 (allegation 1.l). It was 120 days delinquent as of August 2013. Both loans are discharged in her bankruptcy petition. $73,405	For Applicant	Unspecified Financial	Admitted	—	—	—
1.m	specific text not stated in this decision	Withdrawn	Unspecified Financial	Unknown	—	—	—
1.n	Property taxes, $5,908. Unresolved. This debt for property taxes on Applicant's condominium is not included in her bankruptcy petition. The property is collateral for her commercial property loan. Applicant is unsure how this property will be handled when the commercial property is foreclosed. She plans to consult with her attorney about how to resolve it. $5,908	For Applicant	Unspecified Financial	Unknown	—	—	—
1.o	Mortgage, $242,697. Included in bankruptcy petition. In February 2013, the lender prevailed in a judgment against Applicant and her husband for the delinquency related to the commercial property mortgage. Applicant’s pay was garnished approximately $520 per month. The lender ultimately initiated foreclosure proceedings on the property. The primary mortgage loan on Applicant's commercial property is listed at $243,000 in her bankruptcy petition, which describes the property as being, in March 2014, “in the late stages of foreclosure.” $242,697	For Applicant	Mortgage or Home Loan Debt	Admitted	—	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

Internal Revenue Service, $3,691. Paid. Although Applicant did not have sufficient documentation to file a complete income tax return for tax year 2011, her accountant timely filed the return, which indicated Applicant owed $2,799. The amended return showed Applicant’s tax liability was reduced by $2,693. With about $40 in interest and penalties, Applicant owed an adjusted tax of $145.22. She provided evidence that the tax is paid.

$3,691

For Applicant

Tax Unpaid

Admitted

—

(a) behavior happened long ago / infrequent / unlikely to recur

—

1.b

Condominium fee, $880. Included in bankruptcy petition. Applicant owed an annual condominium association fee in 2012 for her rental property. When she was informed the debt was $2,180, she thought the association had made an error. After contacting the creditor, she learned that it had filed two claims in two different county courts. However, in 2013, her attorney advised her not to pay the debt because of her pending bankruptcy filing. The current debt of $2,200 is discharged.

$880

For Applicant

Unspecified Financial

Admitted

—

1.c

Medical debt - Unresolved;

$139

For Applicant

Medical Debt

Admitted

—

1.d

Gym - included in bankruptcy petition.

$249

For Applicant

Unspecified Financial

Admitted

—

1.e

totalling $7,948. Included in bankruptcy petition. Applicant and her husband used credit cards to pay business and family expenses. When finances were tight, she paid minimum amounts on the balances. She was able to bring some cards to a current status, but others became delinquent. She stopped paying on these balances, on her attorney’s advice. All were discharged through her bankruptcy. Applicant and her husband no longer use credit cards.

$7,948

For Applicant

Credit Card Debt

Admitted

—

1.f

$7,948

For Applicant

Credit Card Debt

Admitted

—

1.i

$7,948

For Applicant

Credit Card Debt

Admitted

—

1.j

$7,948

For Applicant

Credit Card Debt

Admitted

—

1.k

Line of credit loans. Included in bankruptcy petition. In 2005 or 2006, Applicant opened a line of credit for business equipment. In 2013, it was delinquent, with a balance of $20,135 (allegation 1.k). She also obtained a home equity loan of $73,405 in 2002 (allegation 1.l). It was 120 days delinquent as of August 2013. Both loans are discharged in her bankruptcy petition.

$20,135

For Applicant

Unspecified Financial

Admitted

—

1.l

Line of credit loans. Included in bankruptcy petition. In 2005 or 2006, Applicant opened a line of credit for business equipment. In 2013, it was delinquent, with a balance of $20,135 (allegation 1.k). She also obtained a home equity loan of 73,405 in 2002 (allegation 1.l). It was 120 days delinquent as of August 2013. Both loans are discharged in her bankruptcy petition.

$73,405

For Applicant

Unspecified Financial

Admitted

—

1.m

specific text not stated in this decision

Withdrawn

Unspecified Financial

Unknown

—

1.n

Property taxes, $5,908. Unresolved. This debt for property taxes on Applicant's condominium is not included in her bankruptcy petition. The property is collateral for her commercial property loan. Applicant is unsure how this property will be handled when the commercial property is foreclosed. She plans to consult with her attorney about how to resolve it.

$5,908

For Applicant

Unspecified Financial

Unknown

—

1.o

Mortgage, $242,697. Included in bankruptcy petition. In February 2013, the lender prevailed in a judgment against Applicant and her husband for the delinquency related to the commercial property mortgage. Applicant’s pay was garnished approximately $520 per month. The lender ultimately initiated foreclosure proceedings on the property. The primary mortgage loan on Applicant's commercial property is listed at $243,000 in her bankruptcy petition, which describes the property as being, in March 2014, “in the late stages of foreclosure.”

$242,697

For Applicant

Mortgage or Home Loan Debt

Admitted

—

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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

PROCEDURAL RULINGS

FINDINGS OF FACT

POLICIES

ANALYSIS

WHOLE PERSON ANALYSIS

FORMAL FINDINGS

CONCLUSION

FOOTNOTES