ISCR Case 14-04283.h1

Case Headnote

ISCR Case No. 14-04283.h1

grantedMay 18, 2016· Hon. Arthur E. Marshall, Jr.· hearing

Summary

A 64-year-old operational architect was granted a security clearance despite concerns under Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The applicant's financial issues, which led to a Chapter 13 bankruptcy filing in May 2014, were largely attributed to circumstances beyond her control. She completed her bankruptcy payments by October 2015, and her debts were discharged on January 8, 2016.

Specific financial concerns included a mortgage account that was past due by approximately $54,997, with a loan balance of $415,387. This account was resolved through a short sale. A charged-off home equity loan of about $51,168 was settled in full. Other debts, including a charged-off account for approximately $5,592, a collection account for about $3,718 from a failed business venture, and two medical collection accounts for $39 and $440, were all satisfied through bankruptcy payments and discharge.

Additionally, the applicant had responded "no" to a question about delinquencies on her April 2013 security clearance application, despite some existing delinquent accounts. However, it was determined she had limited time to complete the application, was unaware of the specific debts or her credit report contents, and had no intent to mislead investigators. The judge found she demonstrated responsible behavior in resolving her debts and is now living within her means, leading to the clearance being granted.

Why the Applicant Prevailed

The applicant completed her Chapter 13 bankruptcy payments early and had her debts discharged.
She demonstrated responsible financial behavior and is now living within her means.
The applicant's inaccuracies in her security clearance application were not intentional and did not indicate a lack of candor.

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

Key Rule Quoted

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

Procedural Posture

SOR issuedNov 5, 2014
Answer filedundated
Hearing heldDec 3, 2015
Decision dateMay 18, 2016

Cite For

Mitigation of Financial Issues Under Guideline F Due to Circumstances Beyond Control
Lack of Intent to Falsify Information in Security Clearance Applications Under Guideline E
Successful Completion of Bankruptcy as a Mitigating Factor in Security Clearance Cases.

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

¶	Allegation	Finding	Conduct	Concealed Issue	Response	Disqualifying (¶16)	Mitigating applied (¶17)	Mitigation
2.a	In completing her April 2013 security clearance application (SCA), nearly a year before she filed for Chapter 13 bankruptcy protection, Applicant wrote “no” in response to “Section 26 – Financial Record. . . Delinquency Involving Routine Accounts (other than previously listed, have any of the following happened? . . . You are currently over 120 days delinquent on any debt? (Include financial obligations for which you are the sole debtor, as well as those for which you are a cosigner or guarantor).” At the time, some of the above delinquent accounts were existent. However, Applicant was only given one weekend to complete her SCA and was unaware of the debts or the contents of her credit report. She saw no reason to think she needed to check whether there had been any changes from her previous SCA. She made no attempt to mislead investigators.	For Applicant	Omission or Failure to DiscloseNOT DELIBERATESELF-CORRECTED	Financial	Denied	—	(b) omission/refusal followed advice of counsel; later cooperated fully	Credited Explanation of Omission Credible

Allegation

Finding

Conduct

Concealed Issue

Response

Disqualifying (¶16)

Mitigating applied (¶17)

Mitigation

2.a

In completing her April 2013 security clearance application (SCA), nearly a year before she filed for Chapter 13 bankruptcy protection, Applicant wrote “no” in response to “Section 26 – Financial Record. . . Delinquency Involving Routine Accounts (other than previously listed, have any of the following happened? . . . You are currently over 120 days delinquent on any debt? (Include financial obligations for which you are the sole debtor, as well as those for which you are a cosigner or guarantor).” At the time, some of the above delinquent accounts were existent. However, Applicant was only given one weekend to complete her SCA and was unaware of the debts or the contents of her credit report. She saw no reason to think she needed to check whether there had been any changes from her previous SCA. She made no attempt to mislead investigators.

For Applicant

Omission or Failure to DiscloseNOT DELIBERATESELF-CORRECTED

Financial

Denied

—

(b) omission/refusal followed advice of counsel; later cooperated fully

Credited

Explanation of Omission Credible

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	May 2014 Chapter 13 bankruptcy petition – Applicant completed her payments on the bankruptcy in October 2015, and her debt was discharged on January 8, 2016.	For Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (e) reasonable, documented basis to dispute the debt	Documented Debt Paid in Full
1.b	Mortgage account past due in the approximate amount of $54,997 with a loan balance of $415,387. The home was originally purchased for about $220,000, but multiple refinances were sought for upgrades and repairs, such as a new driveway, HVAC system, new garage, updated electrical wiring, etc. Due to a 2014 short sale, which was completed after a contract breach and then a protracted period of time to gaining approval for a short sale, this account is now at zero. $54,997	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (e) reasonable, documented basis to dispute the debt	Documented Debt Paid in Full
1.c	Charged-off home equity loan with an approximate balance of $51,168. This account was settled in full. $51,168	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (e) reasonable, documented basis to dispute the debt	Documented Debt Paid in Full
1.d	Charged-off account (ending -3605) for about $5,592. This debt was satisfied via bankruptcy payments and ultimate bankruptcy discharge. $5,592	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (e) reasonable, documented basis to dispute the debt	Documented Debt Paid in Full
1.e	Collection account in the approximate amount of $3,718 for a failed business venture Applicant tried during a period of unemployment. Debt was satisfied through bankruptcy payments and ultimate discharge. $3,718	For Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (e) reasonable, documented basis to dispute the debt	Documented Debt Paid in Full
1.f	Medical collection account for $39. Debt was satisfied through bankruptcy payments and ultimate discharge. $39	For Applicant	Medical Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (e) reasonable, documented basis to dispute the debt	Documented Debt Paid in Full
1.g	Medical collection account for $440. Debt was satisfied through bankruptcy payments and ultimate discharge. $440	For Applicant	Medical Debt	Admitted	(a) inability to satisfy debts (c) a history of not meeting financial obligations	(b) conditions largely beyond the person’s control; acted responsibly (d) good-faith effort to repay or otherwise resolve debts (e) reasonable, documented basis to dispute the debt	Documented Debt Paid in Full

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

May 2014 Chapter 13 bankruptcy petition – Applicant completed her payments on the bankruptcy in October 2015, and her debt was discharged on January 8, 2016.

For Applicant

Bankruptcy Filing

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

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

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

(e) reasonable, documented basis to dispute the debt

Documented

Debt Paid in Full

1.b

Mortgage account past due in the approximate amount of $54,997 with a loan balance of $415,387. The home was originally purchased for about $220,000, but multiple refinances were sought for upgrades and repairs, such as a new driveway, HVAC system, new garage, updated electrical wiring, etc. Due to a 2014 short sale, which was completed after a contract breach and then a protracted period of time to gaining approval for a short sale, this account is now at zero.

$54,997

For Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

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

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

(e) reasonable, documented basis to dispute the debt

Documented

Debt Paid in Full

1.c

Charged-off home equity loan with an approximate balance of $51,168. This account was settled in full.

$51,168

For Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

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

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

(e) reasonable, documented basis to dispute the debt

Documented

Debt Paid in Full

1.d

Charged-off account (ending -3605) for about $5,592. This debt was satisfied via bankruptcy payments and ultimate bankruptcy discharge.

$5,592

For Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

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

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

(e) reasonable, documented basis to dispute the debt

Documented

Debt Paid in Full

1.e

Collection account in the approximate amount of $3,718 for a failed business venture Applicant tried during a period of unemployment. Debt was satisfied through bankruptcy payments and ultimate discharge.

$3,718

For Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

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

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

(e) reasonable, documented basis to dispute the debt

Documented

Debt Paid in Full

1.f

Medical collection account for $39. Debt was satisfied through bankruptcy payments and ultimate discharge.

$39

For Applicant

Medical Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

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

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

(e) reasonable, documented basis to dispute the debt

Documented

Debt Paid in Full

1.g

Medical collection account for $440. Debt was satisfied through bankruptcy payments and ultimate discharge.

$440

For Applicant

Medical Debt

Admitted

(a) inability to satisfy debts

(c) a history of not meeting financial obligations

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

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

(e) reasonable, documented basis to dispute the debt

Documented

Debt Paid in Full

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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