ISCR Case 14-02521.h1

Case Headnote

ISCR Case No. 14-02521.h1

grantedNov 24, 2014· Hon. James F. Duffy· hearing

Summary

A 53-year-old defense contractor and retired U.S. Air Force master sergeant was granted a security clearance despite concerns under Guideline F (Financial Considerations). The Statement of Reasons (SOR) cited five delinquent debts totaling $57,734. These included a $3,312 home project credit card, a $1,136 collection account (a duplicate of another debt), a $287 cell phone account for his son, a $1,532 credit card, and a $51,467 second mortgage.

The applicant successfully mitigated these concerns by demonstrating that the financial difficulties were largely due to his wife's job loss and medical disability. He took responsible actions to resolve the debts. Specifically, he paid off the $3,312 and $1,532 credit card debts in March 2012, prior to the SOR. The $287 cell phone account was paid in August 2014 after he became aware of its delinquency.

For the $51,467 second mortgage, which stemmed from a 2006 home purchase and subsequent foreclosure in 2008, the applicant arranged a settlement after receiving the SOR. He agreed to a lump-sum payment of $2,000 and 25 monthly payments of $375, totaling $11,000, and provided proof of initial payments. The judge found that the applicant's financial situation was stable, with a net monthly remainder of approximately $3,828, and that he had demonstrated reliability and trustworthiness. The security clearance was granted.

Why the Applicant Prevailed

The applicant demonstrated responsible actions in addressing his financial problems.
The financial issues were largely due to circumstances beyond the applicant's control, such as his wife's job loss and medical disability.
The applicant's financial situation is now stable, with a net monthly remainder of about $3,828.

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(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
AG ¶ 20(d)appliedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors
AG ¶ 20(a)appliedThe Behavior Happened so Long Ago, Was so Infrequent, or Occurred Under Such Circumstances That It Is Unlikely to Recur
AG ¶ 20(e)appliedThe Individual Has a Reasonable Basis to Dispute the Legitimacy of the Past-due Debt

Key Rule Quoted

“Eligibility for a security clearance is predicated upon the applicant meeting the criteria contained in the adjudicative guidelines.”

Procedural Posture

SOR issuedJul 22, 2014
Answer filedAug 27, 2014Applicant elected to have the case decided on the written record.
Hearing held—No hearing; decided on the written record.
Decision dateNov 24, 2014

Cite For

Mitigation of Financial Issues Under Guideline F Due to Circumstances Beyond Control
Responsible Actions Taken to Resolve Delinquent Debts
Whole-person Analysis 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	collection account in the amount of $3,312. This was a home project credit card account that was opened in 2006. Applicant paid off this debt on March 9, 2012, well before the SOR was issued. $3,312	For Applicant	Credit Card Debt	Admitted	—	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.b	collection account in the amount of $1,136. This was a duplicate of the debt alleged in SOR ¶ 1.d. $1,136	For Applicant	Credit Card Debt	Denied	—	(e) reasonable, documented basis to dispute the debt	Claimed Debt Paid in Full
1.c	collection account in the amount of $287. This was a cell telephone account that was opened for his son in 2005. His son was supposed to be responsible for making the payments. Applicant was unaware this account was delinquent until he received the SOR. On August 23, 2014, he paid off this account. $287	For Applicant	Utility or Phone Debt	Admitted	—	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.d	collection account in the amount of $1,532. This was a credit card account that was opened in 2002. Applicant paid off this debt on March 29, 2012, well before the SOR was issued. $1,532	For Applicant	Credit Card Debt	Denied	—	(d) good-faith effort to repay or otherwise resolve debts	Documented Debt Paid in Full
1.e	collection account in the amount of $51,467. This was a second mortgage on a home that Applicant and his wife purchased for $218,000 in 2006. The home was financed with a $174,000 first mortgage and $44,000 second mortgage. Their monthly mortgage payments were $2,165 for both mortgages. At that time, their monthly income was about $10,490. After Applicant’s wife was laid off and they exhausted their savings, they were unable to make the mortgage payments. In 2008, the mortgage holder initiated foreclosure proceedings. The home was vacated in June 2008. Applicant believed the foreclosure proceeding were completed in 2009. He never received any notification of a deficiency on the first or second mortgage. His credit report reflected that the first mortgage was foreclosed and had a zero balance. After receipt of the SOR, Applicant arranged to resolve the second mortgage even though it was past the five-year statute of limitation for collection. Under the repayment arrangement, he agreed to make a lump-sum payment of $2,000 and 25 monthly payments of $375 to fully satisfy the debt. The total settlement amount is $11,000. He provided proof that he made the $2,000 lump-sum payment and first $375 monthly payment. $51,467	For Applicant	Mortgage or Home Loan Debt	Denied	—	(b) conditions largely beyond the person’s control; acted responsibly (c) received/receiving counseling; problem being resolved (d) good-faith effort to repay or otherwise resolve debts	Documented Payment Plan with Creditor

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

collection account in the amount of $3,312. This was a home project credit card account that was opened in 2006. Applicant paid off this debt on March 9, 2012, well before the SOR was issued.

$3,312

For Applicant

Credit Card Debt

Admitted

—

(d) good-faith effort to repay or otherwise resolve debts

Documented

Debt Paid in Full

1.b

collection account in the amount of $1,136. This was a duplicate of the debt alleged in SOR ¶ 1.d.

$1,136

For Applicant

Credit Card Debt

Denied

—

(e) reasonable, documented basis to dispute the debt

Claimed

Debt Paid in Full

1.c

collection account in the amount of $287. This was a cell telephone account that was opened for his son in 2005. His son was supposed to be responsible for making the payments. Applicant was unaware this account was delinquent until he received the SOR. On August 23, 2014, he paid off this account.

$287

For Applicant

Utility or Phone Debt

Admitted

—

(d) good-faith effort to repay or otherwise resolve debts

Documented

Debt Paid in Full

1.d

collection account in the amount of $1,532. This was a credit card account that was opened in 2002. Applicant paid off this debt on March 29, 2012, well before the SOR was issued.

$1,532

For Applicant

Credit Card Debt

Denied

—

(d) good-faith effort to repay or otherwise resolve debts

Documented

Debt Paid in Full

1.e

collection account in the amount of $51,467. This was a second mortgage on a home that Applicant and his wife purchased for $218,000 in 2006. The home was financed with a $174,000 first mortgage and $44,000 second mortgage. Their monthly mortgage payments were $2,165 for both mortgages. At that time, their monthly income was about $10,490. After Applicant’s wife was laid off and they exhausted their savings, they were unable to make the mortgage payments. In 2008, the mortgage holder initiated foreclosure proceedings. The home was vacated in June 2008. Applicant believed the foreclosure proceeding were completed in 2009. He never received any notification of a deficiency on the first or second mortgage. His credit report reflected that the first mortgage was foreclosed and had a zero balance. After receipt of the SOR, Applicant arranged to resolve the second mortgage even though it was past the five-year statute of limitation for collection. Under the repayment arrangement, he agreed to make a lump-sum payment of $2,000 and 25 monthly payments of $375 to fully satisfy the debt. The total settlement amount is $11,000. He provided proof that he made the $2,000 lump-sum payment and first $375 monthly payment.

$51,467

For Applicant

Mortgage or Home Loan Debt

Denied

—

(b) conditions largely beyond the person’s control; acted responsibly

(c) received/receiving counseling; problem being resolved

(d) good-faith effort to repay or otherwise resolve debts

Documented

Payment Plan with Creditor

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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

DECISION

FOOTNOTES