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Summary

The applicant, a 52-year-old defense contractor with an Associate of Science Degree in Electronics, faced financial difficulties under Guideline F, including multiple debts. The judge found that the applicant had made significant efforts to resolve her debts, including contesting erroneous debts and establishing payment plans, leading to a decision to grant her security clearance.

Under Guideline F (Financial Considerations), the Statement of Reasons alleged the following: This overdue debt is cited in the SOR in the amount of $4,852. Applicant denied this allegation in her RSOR. At the hearing, Applicant testified that this is not her debt. She first learned of the debt when a creditor sought to garnish her wages for a judgement against her for this debt. (Tr at 32-38.) Exhibit 2 includes two letters sent from Applicant to the attorney for this creditor in which she informs the attorney that the address listed is not her address and this is not her debt. Among the post-hearing documents submitted by Applicant were two letters that Applicant wrote to the credit reporting agencies, informing them that this was not her debt. (Exhibit F.) Also Applicant included an Ex Parte Application to Set Aside Judgement and Dismiss Case filed by the attorney for the creditor for this debt because the judgment was filed against the wrong party, and an Order Setting Aside the Judgement and Dismissing the Case against Applicant, signed by the judge on January 29, 2013. (Exhibit H.) I find that this erroneous debt has been resolved through Applicant’s efforts (1.a). This overdue debt is cited in the SOR in the amount of $1,790. Applicant admitted this allegation in her RSOR. Applicant testified that this debt is unpaid, but she has contacted the creditor and has agreed to a payment plan. (Tr at 52-53.) Exhibit L includes information from Applicant that she has made an arrangement for a monthly payment to this creditor. I find that this debt has not been resolved, but Applicant has begun the process of paying this debt (1.b). This overdue debt is cited in the SOR in the amount of $207,000. Applicant denied this allegation in her RSOR. Applicant testified that this debt was for the first mortgage of her primary residence. Because she returned to school full-time and her work hours were reduced, she fell behind in paying her mortgage. She attempted to work with the bank in an attempt to modify her loan, including withdrawing $17,000 from her 401K and paying it to the bank and continually completing all of the forms sent to her by the bank. But despite her best efforts, the bank foreclosed and auctioned off her home. She contacted her Congressman requesting help, and she received a letter back from him indicating he would look into the matter, but her home was not returned. (Tr at 42-50.) (Exhibit A.) It is Applicant’s contention that State Bill (CB) 1178 Section 580b, referred to as the anti-deficiency statute, and referred to by Applicant in her RSOR and during her testimony, would limit the creditor’s right to only pursue the value of the property in the foreclosure sale. I find that based on this statute, this debt is no longer owing by Applicant (1.c). This overdue debt is cited in the SOR in the amount of $8,881. Applicant denied this allegation in her RSOR. Applicant testified that this debt is for a second mortgage for the same home as 1.c., above. It is Applicant’s contention that this debt is not owed for the same reason as that cited in 1.c., and I concur. Based on the statute and the testimony of Applicant and her husband, I find that this debt is no longer owing by Applicant (1.d). This overdue debt is cited in the SOR in the amount of $2,216. Applicant admitted this allegation in her RSOR. Applicant testified that this debt has been paid. (Tr at 51-52.) Exhibit C establishes that Applicant has paid off this debt. I find that this debt has been resolved (1.e). This overdue debt is cited in the SOR in the amount of $566. Applicant admitted this allegation in her RSOR. Applicant testified that this debt has been paid. (Tr at 53-54.) Exhibit B establishes that Applicant has paid off this debt. I find that this debt has been resolved (1.f). This overdue debt is cited in the SOR in the amount of $1,588. Applicant admitted this allegation in her RSOR. She testified that she determined, based on a conversation with the creditor, that this debt is the same as 1.b., above. (Tr at 54-55.) I find that this debt is being resolved, but it is still owed (1.g). This overdue debt is cited in the SOR in the amount of $1,073. Applicant admitted this allegation in her RSOR. She testified that she has not been able to contact this creditor. She attempted to ascertain if this company had a phone number, but she was informed from the information operator that there is no listing anywhere in the country for this company. (Tr at 55-56.) I find that Applicant has made a good-faith effort to contact this creditor, but she has been unable to do so (1.h).

The judge granted the clearance. The government raised disqualifying conditions AG ¶ 19 (a), AG ¶ 19 (c). The judge applied mitigating conditions AG ¶ 20 (b), AG ¶ 20 (c), AG ¶ 20 (d). The decision turned on the following: The applicant successfully contested a debt that was not hers, resulting in the judgment being set aside; She demonstrated responsible efforts to resolve her financial issues, including establishing payment plans and paying off certain debts; The applicant's financial difficulties were largely due to circumstances beyond her control, such as reduced work hours and family obligations.

Why the Applicant Prevailed

• The applicant successfully contested a debt that was not hers, resulting in the judgment being set aside.
• She demonstrated responsible efforts to resolve her financial issues, including establishing payment plans and paying off certain debts.
• The applicant's financial difficulties were largely due to circumstances beyond her control, such as reduced work hours and family obligations.

Conditions Referenced

Key Rule Quoted

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

Procedural Posture

• SOR issuedOct 15, 2012
• Answer filedNov 7, 2012
• Hearing heldMay 6, 2013
• Decision dateJun 25, 2013

Cite For

• Mitigation of Financial Difficulties Under Guideline F
• Good-faith Efforts to Resolve Debts
• Impact of Circumstances Beyond Control on Financial Obligations