Loading case…

Summary

The applicant, a 61-year-old defense contractor and Marine Corps veteran, faced security clearance denial under Guideline F due to significant unresolved financial issues totaling approximately $111,391. Despite some debts being resolved, the applicant failed to demonstrate responsible management of his financial obligations, particularly regarding substantial student loans. The judge concluded that the applicant's financial situation raised concerns about his reliability and trustworthiness.

Under Guideline F (Financial Considerations), the Statement of Reasons alleged the following: Applicant denied that he owed a finance company $33,772 for a past-due mortgage. Applicant stated that he had arranged for a short sale of the house and did not owe any money on the mortgage. He submitted an IRS Form 1099 from 2012 concerning the house, which indicated that $338,710 of debt had been discharged. Applicant also submitted his tax return for the same year, which indicates the same thing. (Applicant Exhibit J at 6-9; Tr. 35-40, 73-74.) This debt is resolved (1.a). Applicant admitted that he owed a collection agent $2,189 for a past-due account. He states that he has a payment arrangement with this creditor and is paying on it. The credit reports in the record show Applicant is, “Paying under a partial payment agreement.” In addition, he submitted a copy of his August 2015 payment. (Government Exhibits 5 at 2, 6 at 2, 7 at 3; Applicant Exhibit J at 11; Tr. 40-45, 74-75.) This debt is being resolved (1.b). Applicant denied that he owes $1,440 to an automobile finance company for a repossessed vehicle. He states that he has a payment arrangement with this creditor and is paying on it. The credit reports in the record support Applicant, showing a steadily decreasing balance. In addition, he submitted a copy of his July 2015 payment. (Government Exhibits 5 at 2, 6 at 4, 7 at 3; Applicant Exhibit J at 12; Tr. 49-51, 75-76.) This debt is being resolved (1.c). Applicant admitted that he owed a telephone company $243 for a past-due account. The collection agency on this account sent Applicant a proposed settlement letter on July 16, 2015. After the hearing, Applicant’s attorney stated that his client had made the required payment in a timely fashion, but had not received a receipt as of the date the record closed. (Applicant Exhibit J at 4, 10; Tr. 51-52, 75-76.) Based on all of the available information, I find this debt is being resolved (1.d). Applicant admitted that he owes a telephone company $56 for a past-due account. He stated, “I talked with them last week, and I will settle that bill shortly.” No evidence was submitted that Applicant has paid this debt. (Tr. 53-54, 76.) This debt is not resolved (1.e). Applicant admitted that he is indebted to the Department of Education for a student loan with a past-due amount of $2,797. Applicant has not made any current payments on this debt. He is in communication with the collection agent, but there are no current plans to resolve this debt. (Applicant Exhibit J at 4; Tr. 54-56, 77-79.) This debt is not resolved (1.f). Applicant denied that he is indebted to a creditor for a collection account in the amount of $61,367. According to Applicant, this debt is a student loan for his son. He also states that his late wife signed the loan application in his name without his permission shortly before she died. In support of that statement he submitted Applicant Exhibit C, the loan application, arguing that the signature on the form was not his. However, Applicant admitted in testimony that a lawsuit has now been filed by this creditor in relation to this debt. Applicant did not submit the complaint or his answer. As of the present time, Applicant did not submit sufficient evidence to show that he is not legally responsible for this debt. (Tr. 56-62, 81-88, 97-101.) This debt is not resolved (1.g). Applicant admitted that he is indebted to the Department of Education for a student loan with a past-due amount of $1,792. Applicant has not made any current payments on this debt. He is in communication with the collection agent, but there are no current plans to resolve this debt. (Applicant Exhibit J at 4; Tr. 54-56, 77-79.) This debt is not resolved (1.h). Applicant admitted that he is indebted to the Department of Education for a student loan with a past-due amount of $1,165. Applicant has not made any current payments on this debt. He is in communication with the collection agent, but there are no current plans to resolve this debt. (Applicant Exhibit J at 4; Tr. 54-56, 77-79.) This debt is not resolved (1.i). Applicant admitted that he is indebted to the Department of Education for a student loan with a past-due amount of $1,726. Applicant has not made any current payments on this debt. He is in communication with the collection agent, but there are no current plans to resolve this debt. (Applicant Exhibit J at 4; Tr. 54-56, 77-79.) This debt is not resolved (1.j). Applicant admitted that he is indebted in the amount of $4,758 for a past-due credit card debt. He states that he has a payment arrangement with this creditor and is paying $50 a month on it. The credit reports in the record support Applicant, showing a steadily decreasing balance on this account. (Government Exhibits 4 at 4, 6 at 3, 7 at 5; Tr. 62-64, 79-80.) This debt is being resolved (1.k). Applicant denied in his Answer that he owed a medical creditor $86 for a past-due account. He testified that he had talked to the creditor just before the hearing, and determined that it was a debt of his. However, do the age of the debt, Applicant felt it was uncollectible and has no plans to pay it. (Applicant Exhibit I; Tr. 64-67, 80-81.) This debt is not resolved (1.l).

The judge denied the clearance. The government raised disqualifying conditions AG ¶ 19(a), AG ¶ 19(c). The judge applied mitigating conditions AG ¶ 20(a), AG ¶ 20(b), AG ¶ 20(d). The decision turned on the following: The applicant has unresolved debts totaling approximately $111,391, indicating financial overextension; The applicant has not made payments on significant student loans since 2008, demonstrating a lack of responsible financial management; The applicant failed to provide sufficient evidence to dispute the legitimacy of a substantial debt of over $60,000.

Why the Applicant Was Denied

• The applicant has unresolved debts totaling approximately $111,391, indicating financial overextension.
• The applicant has not made payments on significant student loans since 2008, demonstrating a lack of responsible financial management.
• The applicant failed to provide sufficient evidence to dispute the legitimacy of a substantial debt of over $60,000.

Conditions Referenced

Key Rule Quoted

“Failure or inability to live within one’s means, satisfy debts, and meet financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual’s reliability, trustworthiness and ability to protect classified information.”

Procedural Posture

• SOR issuedJan 27, 2015
• Answer filedMar 31, 2015
• Hearing heldJul 22, 2015
• Decision dateFeb 18, 2016

Cite For

• Financial Overextension as a Disqualifying Condition Under Guideline F
• Insufficient Evidence to Mitigate Financial Concerns Despite Personal Circumstances
• The Importance of Demonstrating Responsible Financial Management for Security Clearance Eligibility