ISCR Case 12-09849.h1

Case Headnote

ISCR Case No. 12-09849.h1

deniedJul 1, 2012· Hon. Robert Robinson Gales· hearing

Summary

A 59-year-old facility security specialist for a defense contractor was denied a security clearance under Guideline F (Financial Considerations) due to a history of financial issues, including a bankruptcy filing in 2000 and multiple delinquent debts. The applicant admitted to approximately $251,021 in outstanding debts across several accounts, but failed to provide sufficient documentation to support her claims regarding lower balances or debt cancellation.

Specific allegations included three bank credit cards with high credits ranging from $6,000 to $17,140, all of which were past due, charged off, and sold to debt purchasers. The applicant made no effort to resolve these accounts, which were subsequently removed from her credit report due to expired statutes of limitations. A recreational boat loan with a high credit of $21,878 also remained unresolved after the boat was repossessed and sold. Additionally, a charged-off home equity line of credit for $184,784 lacked proper documentation for its claimed cancellation, and another credit card with a high credit of $6,194 was charged off without resolution.

The applicant also owed $3,776 in delinquent income taxes to the IRS for tax year 2011, which was part of an installment agreement covering multiple tax years with a remaining balance of $2,829.26. Despite some positive work performance and character references, the applicant's failure to demonstrate sufficient financial responsibility or efforts to resolve her debts, coupled with a lack of financial counseling since her bankruptcy, led to the denial of her security clearance.

Why the Applicant Was Denied

The applicant had a lengthy history of avoiding payment of bills, including a bankruptcy filing in 2000.
She admitted to multiple delinquent accounts totaling approximately $251,021 without making efforts to resolve them.
The applicant's financial problems were not under control, and she had not sought financial counseling since her bankruptcy.

Conditions Referenced

Disqualifying

F.3raisedInability to Satisfy Debts
F.4raisedUnexplained Affluence

Key Rule Quoted

“A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence.”
— Department of the Navy v. Egan, 484 U.S. 518, 528 (1988)

Procedural Posture

SOR issuedJul 8, 2015
Answer filedAug 11, 2015
Hearing heldOct 26, 2015
Decision dateJun 28, 2016

Cite For

Denial of Security Clearance Due to Financial Irresponsibility Under Guideline F
Failure to Mitigate Financial Concerns Despite Positive Character References
Importance of Demonstrating Financial Stability for 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	This is a bank credit card with a credit limit of $10,000 and a high credit of $11,819 that was past due and charged off before it was sold to a debt purchaser. Applicant contended that the unpaid balance was actually approximately $7,500, but she offered no documentation to support her contention. Applicant has made no effort to contact the creditor or debt purchaser in an effort to resolve the account, and the account has been removed from her latest credit report because the state statute of limitations had expired in October 2015.	Against Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.b	This is a bank credit card with a credit limit of $6,000 and an unpaid and past-due balance of $7,276 that was sold to a debt purchaser. Applicant contended that the unpaid balance was actually approximately $2,800, but she offered no documentation to support her contention. Applicant has made no effort to contact the creditor or debt purchaser in an effort to resolve the account, and the account has been removed from her latest credit report because the state statute of limitations had expired in August 2015.	Against Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.c	This is a bank credit card with a high credit of $17,140 and an unpaid and past-due balance of $25,682 that was sold to a debt purchaser. Applicant contended that unpaid balance was actually approximately $9,146, but she offered no documentation to support her contention. Applicant has made no effort to contact the creditor or debt purchaser in an effort to resolve the account, and the account has been removed from her latest credit report because the state statute of limitations had expired in October 2015.	Against Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.d	This is a recreational boat loan with a high credit of $21,878 and an unpaid and past-due balance of $9,874. The boat was repossessed and sold. Applicant claimed the $9,874 was the remaining balance after the boat was sold, but she offered no documentation to support her claim. Applicant has made no effort to contact the creditor in an effort to resolve the account because it is scheduled to be removed from her credit report because the state statute of limitations will expire in May 2018.	Against Applicant	Auto Loan Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.e	This is a bank home equity line of credit to make improvements to their residence as well as build another residence with a credit limit of $185,000 and an unpaid balance of $184,784 that was charged off. Applicant contended that she was issued a Form 1099-C, Cancellation of Debt, and that she is no longer liable for the debt because it was canceled under the Mortgage Forgiveness Debt Relief Act of 2007 (MFDRA). While she submitted a Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment, attached to her Form 1040 (2011), neither document is signed, and she failed to submit a copy of the Form 1099-C.	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.f	This is a credit card with a credit limit of $5,592 and a high credit and unpaid balance of $6,194 that was charged off. Applicant has made no effort to contact the creditor or debt purchaser in an effort to resolve the account, and the account has been removed from her latest credit report because the state statute of limitations had expired in April 2015.	Against Applicant	Credit Card Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.g	This is a debt for delinquent income taxes in the amount of $3,776 owed to the IRS for the tax year 2011. Applicant contended that the increased tax was incurred when she withdrew funds from her 401(k) retirement account, but she failed to submit documentation indicating how much was withdrawn, when it was withdrawn, or for what purpose it was withdrawn. Instead, she offered evidence that she has had three separate loans from that account, and that one loan for $4,200 has been paid off, and there are two existing active loans, for $8,400 and $9,600, that as of November 6, 2015, are being paid biweekly in the amounts of $71.78 and $82.04. The IRS Installment Agreement reflects unpaid taxes for the tax years 2011, 2013, and 2014, totaling a remaining balance of $2,829.26, and a separate monthly payment of $100. $3,776	Against Applicant	Tax Unpaid	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	—	—
1.h	specific text not stated in this decision	Against Applicant	Unspecified Financial	Unknown	—	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

This is a bank credit card with a credit limit of $10,000 and a high credit of $11,819 that was past due and charged off before it was sold to a debt purchaser. Applicant contended that the unpaid balance was actually approximately $7,500, but she offered no documentation to support her contention. Applicant has made no effort to contact the creditor or debt purchaser in an effort to resolve the account, and the account has been removed from her latest credit report because the state statute of limitations had expired in October 2015.

Against Applicant

Credit Card Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.b

This is a bank credit card with a credit limit of $6,000 and an unpaid and past-due balance of $7,276 that was sold to a debt purchaser. Applicant contended that the unpaid balance was actually approximately $2,800, but she offered no documentation to support her contention. Applicant has made no effort to contact the creditor or debt purchaser in an effort to resolve the account, and the account has been removed from her latest credit report because the state statute of limitations had expired in August 2015.

Against Applicant

Credit Card Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.c

This is a bank credit card with a high credit of $17,140 and an unpaid and past-due balance of $25,682 that was sold to a debt purchaser. Applicant contended that unpaid balance was actually approximately $9,146, but she offered no documentation to support her contention. Applicant has made no effort to contact the creditor or debt purchaser in an effort to resolve the account, and the account has been removed from her latest credit report because the state statute of limitations had expired in October 2015.

Against Applicant

Credit Card Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.d

This is a recreational boat loan with a high credit of $21,878 and an unpaid and past-due balance of $9,874. The boat was repossessed and sold. Applicant claimed the $9,874 was the remaining balance after the boat was sold, but she offered no documentation to support her claim. Applicant has made no effort to contact the creditor in an effort to resolve the account because it is scheduled to be removed from her credit report because the state statute of limitations will expire in May 2018.

Against Applicant

Auto Loan Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.e

This is a bank home equity line of credit to make improvements to their residence as well as build another residence with a credit limit of $185,000 and an unpaid balance of $184,784 that was charged off. Applicant contended that she was issued a Form 1099-C, Cancellation of Debt, and that she is no longer liable for the debt because it was canceled under the Mortgage Forgiveness Debt Relief Act of 2007 (MFDRA). While she submitted a Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment, attached to her Form 1040 (2011), neither document is signed, and she failed to submit a copy of the Form 1099-C.

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.f

This is a credit card with a credit limit of $5,592 and a high credit and unpaid balance of $6,194 that was charged off. Applicant has made no effort to contact the creditor or debt purchaser in an effort to resolve the account, and the account has been removed from her latest credit report because the state statute of limitations had expired in April 2015.

Against Applicant

Credit Card Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.g

This is a debt for delinquent income taxes in the amount of $3,776 owed to the IRS for the tax year 2011. Applicant contended that the increased tax was incurred when she withdrew funds from her 401(k) retirement account, but she failed to submit documentation indicating how much was withdrawn, when it was withdrawn, or for what purpose it was withdrawn. Instead, she offered evidence that she has had three separate loans from that account, and that one loan for $4,200 has been paid off, and there are two existing active loans, for $8,400 and $9,600, that as of November 6, 2015, are being paid biweekly in the amounts of $71.78 and $82.04. The IRS Installment Agreement reflects unpaid taxes for the tax years 2011, 2013, and 2014, totaling a remaining balance of $2,829.26, and a separate monthly payment of $100.

$3,776

Against Applicant

Tax Unpaid

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

—

1.h

specific text not stated in this decision

Against Applicant

Unspecified Financial

Unknown

—

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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