ISCR Case 14-01678.h1

Case Headnote

ISCR Case No. 14-01678.h1

grantedMay 19, 2015· Hon. Robert Robinson Gales· hearing

Summary

A 32-year-old defense contractor was granted a security clearance despite concerns under Guideline F (Financial Considerations). The issues primarily arose from his first wife's actions during their divorce and subsequent medical problems affecting his second wife. The applicant proactively addressed his debts, including cashing out his 401(k) and making payments on delinquent accounts.

The Statement of Reasons detailed seven financial allegations. These included a disputed bank checking account, two education overpayments to the U.S. Department of Veterans Affairs, two bank credit card accounts, and a Military Star credit card account. All six of these accounts were resolved, with payments made or tax refunds applied, resulting in paid-in-full or zero balances by late 2014 or early 2015.

One remaining issue involved a credit union automobile loan with a $13,009 balance that became delinquent and was charged off after the vehicle was repossessed in Korea without the applicant or creditor's initial knowledge. Despite efforts to establish a repayment plan, this account remained unresolved. However, the judge found that the applicant had mitigated the overall financial concerns, noting that the issues were largely beyond his control and he demonstrated a commitment to responsible financial management.

Why the Applicant Prevailed

The applicant resolved six out of seven delinquent accounts by taking proactive measures.
The financial issues were largely beyond the applicant's control, stemming from his first wife's actions and personal circumstances.
The applicant demonstrated a commitment to managing his finances responsibly moving forward.

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 That Resulted in Financial Problems Were Largely Beyond the Person's Control
AG ¶ 20(c)appliedEvidence of Counseling or Resolution of Financial Problems
AG ¶ 20(d)appliedGood-faith Effort to Repay Overdue Creditors
AG ¶ 20(e)appliedReasonable Basis to Dispute Legitimacy of Past-due Debt

Key Rule Quoted

“Security clearance adjudications are aimed at evaluating an applicant’s judgment, reliability, and trustworthiness. They are not a debt-collection procedure.”

Procedural Posture

SOR issuedMay 30, 2014
Answer filedApr 28, 2015Applicant responded to the SOR allegations.
Hearing held—Case decided on the written record.
Decision dateMay 19, 2015

Cite For

Mitigation of Financial Concerns Under Guideline F
Consideration of Circumstances Beyond the Applicant's Control
Proactive Measures Taken to Resolve Debts

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	There is a bank checking account, not listed in Applicant’s 2015 credit report, that Applicant listed in his e-QIP as having an estimated balance of $880, and the SOR alleged a balance of $907. Applicant disputed the amount alleged in the SOR. Applicant had switched bank accounts, and a deposit was sent to another bank and not to the creditor in April 2011. He made a final payment of $785.25 in July 2014, and as of July 14, 2014, the account was considered by the creditor as paid in full. $907	For Applicant	Unspecified Financial	Admitted	—	—	—
1.b	There is a credit union automobile loan with a balance of $13,009 that became delinquent in November 2010 and was eventually charged off. In his e-QIP, Applicant commented that he had switched jobs and without realizing it, the account became one month past due. Upon relocating to Afghanistan, he resumed his monthly payments. He made up the delinquency by paying $1,500, but learned that the vehicle had already been repossessed in Korea. Neither Applicant nor the creditor was aware of the repossession until a representative of the credit union acknowledged the status of the vehicle eight months later. Applicant contacted the creditor to set up a repayment plan and also disputed the account with the credit reporting agency, but he described the account as “a hard account to work with,” because the paperwork keeps being bounced from one person to another. There is no evidence that the vehicle was sold at auction or that Applicant was credited with any reduction in the balance due to the sale of the vehicle. The account has not been resolved. $13,009	For Applicant	Auto Loan Debt	Admitted	—	—	—
1.c	There is an education account with the U.S. Department of Veterans Affairs (referred to in the SOR as the Veterans Administration) in the amount of $815 that was considered an overpayment when a scheduled school class was canceled. He made a payment of $815.95 in July 2014, and as of July 15, 2014, the account was considered by the creditor as paid in full. $815	For Applicant	Unspecified Financial	Admitted	—	—	—
1.d	There is another education account with the U.S. Department of Veterans Affairs (again referred to in the SOR as the Veterans Administration) in the amount of $1,413 that was considered an overpayment when a scheduled school class was canceled. The Internal Revenue Service (IRS) applied $1,430.60 of his income tax refund in September 2014, and as of September 19, 2014, the account was considered by the creditor as paid in full. $1,413	For Applicant	Unspecified Financial	Admitted	—	—	—
1.e	There is a bank credit card account with a credit limit of $5,000 and a reported remaining balance of $5,218 although $4,651 was charged off. Applicant contended he made two payments each of $2,500 and one payment of $218 in November and December 2010 to an identified collection agent. He repeatedly disputed the status of the account, but no correction has been made. He also noted that he furnished his documentation to the “security clearance interviewer,” presumably someone from the U.S. Office of Personnel Management (OPM). Since the account was previously charged off and transferred or sold to another collection agent, and that agent received the amount due, the account has not been separately reported in Applicant’s February 2015 credit report. The account has been resolved. $5,218	For Applicant	Credit Card Debt	Admitted	—	—	—
1.f	There is a bank credit card account with a credit limit of $500 and a high credit of $1,333 that was charged off in the amount of $1,333 and transferred or sold to a debt buyer. The account became delinquent when Applicant’s first wife ran up the balance before their divorce. Applicant contended he paid off the account in full. The account is reported in Applicant’s February 2015 credit report as having a zero balance. $1,333	For Applicant	Credit Card Debt	Admitted	—	—	—
1.g	There is a Military Star credit card account with a balance of $4,900 that purportedly became delinquent in the amount of $5,966. The IRS applied $4,954.66 of his income tax refund in September 2014, and as of February 2015, the account balance was reflected in Applicant’s credit report as zero. $5,966	For Applicant	Credit Card Debt	Admitted	—	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

There is a bank checking account, not listed in Applicant’s 2015 credit report, that Applicant listed in his e-QIP as having an estimated balance of $880, and the SOR alleged a balance of $907. Applicant disputed the amount alleged in the SOR. Applicant had switched bank accounts, and a deposit was sent to another bank and not to the creditor in April 2011. He made a final payment of $785.25 in July 2014, and as of July 14, 2014, the account was considered by the creditor as paid in full.

$907

For Applicant

Unspecified Financial

Admitted

—

1.b

There is a credit union automobile loan with a balance of $13,009 that became delinquent in November 2010 and was eventually charged off. In his e-QIP, Applicant commented that he had switched jobs and without realizing it, the account became one month past due. Upon relocating to Afghanistan, he resumed his monthly payments. He made up the delinquency by paying $1,500, but learned that the vehicle had already been repossessed in Korea. Neither Applicant nor the creditor was aware of the repossession until a representative of the credit union acknowledged the status of the vehicle eight months later. Applicant contacted the creditor to set up a repayment plan and also disputed the account with the credit reporting agency, but he described the account as “a hard account to work with,” because the paperwork keeps being bounced from one person to another. There is no evidence that the vehicle was sold at auction or that Applicant was credited with any reduction in the balance due to the sale of the vehicle. The account has not been resolved.

$13,009

For Applicant

Auto Loan Debt

Admitted

—

1.c

There is an education account with the U.S. Department of Veterans Affairs (referred to in the SOR as the Veterans Administration) in the amount of $815 that was considered an overpayment when a scheduled school class was canceled. He made a payment of $815.95 in July 2014, and as of July 15, 2014, the account was considered by the creditor as paid in full.

$815

For Applicant

Unspecified Financial

Admitted

—

1.d

There is another education account with the U.S. Department of Veterans Affairs (again referred to in the SOR as the Veterans Administration) in the amount of $1,413 that was considered an overpayment when a scheduled school class was canceled. The Internal Revenue Service (IRS) applied $1,430.60 of his income tax refund in September 2014, and as of September 19, 2014, the account was considered by the creditor as paid in full.

$1,413

For Applicant

Unspecified Financial

Admitted

—

1.e

There is a bank credit card account with a credit limit of $5,000 and a reported remaining balance of $5,218 although $4,651 was charged off. Applicant contended he made two payments each of $2,500 and one payment of $218 in November and December 2010 to an identified collection agent. He repeatedly disputed the status of the account, but no correction has been made. He also noted that he furnished his documentation to the “security clearance interviewer,” presumably someone from the U.S. Office of Personnel Management (OPM). Since the account was previously charged off and transferred or sold to another collection agent, and that agent received the amount due, the account has not been separately reported in Applicant’s February 2015 credit report. The account has been resolved.

$5,218

For Applicant

Credit Card Debt

Admitted

—

1.f

There is a bank credit card account with a credit limit of $500 and a high credit of $1,333 that was charged off in the amount of $1,333 and transferred or sold to a debt buyer. The account became delinquent when Applicant’s first wife ran up the balance before their divorce. Applicant contended he paid off the account in full. The account is reported in Applicant’s February 2015 credit report as having a zero balance.

$1,333

For Applicant

Credit Card Debt

Admitted

—

1.g

There is a Military Star credit card account with a balance of $4,900 that purportedly became delinquent in the amount of $5,966. The IRS applied $4,954.66 of his income tax refund in September 2014, and as of February 2015, the account balance was reflected in Applicant’s credit report as zero.

$5,966

For Applicant

Credit Card 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

FINDINGS OF FACT

POLICIES

ANALYSIS

WHOLE PERSON CONCEPT

FORMAL FINDINGS

CONCLUSION

FOOTNOTES