ISCR Case 02-16229.h1

Case Headnote

ISCR Case No. 02-16229.h1

deniedOct 29, 2002· Hon. Joseph Testan· hearing

Summary

A 42-year-old software engineer was denied a security clearance under Guideline F (Financial Considerations) due to a prolonged history of financial instability. This history included a Chapter 7 bankruptcy in 1993, a car repossession in January 2002, and a house foreclosure in February 2002. The applicant also had a debt consolidation agreement in 1999 covering approximately $7,059.00 and faced issues in 1998, such as a 401K withdrawal due to foreclosure, requests for advance medical payments, and a returned check for insufficient funds.

While some debts were resolved, such as one with a zero balance, others remained outstanding or were subject to payment plans. For instance, one debt from 2001 lacked proof of two proposed payments, and another from 2000 was negotiated down to $55.00 with a September 2002 payment deadline. The applicant also owed $20,000.00 after the repossession and sale of his Mercedes Benz, for which he arranged monthly payments of at least $250.00.

Despite recent employment since November 2001 and efforts to manage current debts, the judge found the applicant's financial situation lacked sufficient stability. The recent financial issues, occurring less than a year before the decision, were a key factor in the denial, as the applicant's financial condition was not deemed stable enough to safeguard classified information.

Why the Applicant Was Denied

The applicant has a long history of financial difficulties, including bankruptcy and foreclosure.
Recent financial issues occurred less than one year prior to the decision, indicating instability.
The applicant's financial condition was deemed insufficiently stable to safeguard classified information.

Conditions Referenced

Disqualifying

F.DC.1raisedA History of Not Meeting Financial Obligations.
F.DC.3raisedInability or Unwillingness to Satisfy Debts.

Mitigating

F.MC.3appliedThe Conditions That Resulted in the Behavior Were Largely Beyond the Person's Control.
F.MC.6appliedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve Debts.

Key Rule Quoted

“It is not clearly consistent with the national interest to grant or continue a security clearance for applicant.”

Procedural Posture

SOR issuedJun 3, 2002
Answer filedJul 29, 2002Applicant elected to have the case determined on a written record.
Hearing held—No hearing; case determined on written record.
Decision dateOct 29, 2002

Cite For

Long History of Financial Difficulties as a Basis for Clearance Denial
Insufficient Evidence of Financial Stability to Mitigate Security Concerns
Impact of Recent Financial Issues on 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	Applicant admits that he is indebted to this creditor for an account opened in August 2001. In his response to the SOR, applicant stated that the debt would be satisfied by two payments: the first in the amount of $67.51 on July 25, 2002, and the second in the amount of $67.00 by September 1, 2002. Since he offered no proof that either payment was made, I find that applicant is still indebted to this creditor. $134	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.b	Applicant claims this debt was paid and attached a document to his SOR response that indicates a zero balance on a debt to this creditor. Given this evidence, I find that applicant is no longer indebted to this creditor.	For Applicant	Unspecified Financial	Denied	—	—	—
1.c	Applicant admits that he is indebted to this creditor for an account opened in October 2000. He apparently negotiated the debt down to $55.00, and has until September 1, 2002 to pay it. He states in his response to the SOR that he will satisfy the debt by September 1, 2002. $55	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.d	In January 2002, applicant allowed his Mercedes Benz to be voluntarily repossessed because he could no longer afford the $674.13 monthly payments. After the creditor repossessed and sold the car, applicant was left with a $20,000.00 debt. Applicant states in his response to the SOR that he made arrangements with the creditor requiring him to make monthly payments of at least $250.00 until the debt is satisfied. $20,000	Against Applicant	Auto Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.e	In February 2002, applicant's house was foreclosed upon and auctioned off.	Against Applicant	Mortgage or Home Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.f	Applicant entered into a debt consolidation agreement with a consumer credit counseling service in November 1999 that covered approximately $7,059.00 in debt. $7,059	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.g	In November 1998, applicant's employer notified DoD that prior to applicant's resignation from the company in October 1998, a report was being prepared concerning applicant's "extreme financial instability and debt" as evidenced by the following: - Applicant requested a withdrawal of his entire 401K account balance ($1,285.00) due to extreme financial hardship; namely, his bank was beginning a foreclosure action. - Applicant requested advance payments from the company medical reimbursement plan claiming that he owed money to doctors and dentists. - Applicant claimed that he missed work due to illness but did not go to the doctor because he could not afford the co-payment, which was $10.00. - Applicant's check to his employer for insurance premiums was returned for insufficient funds. $1,285	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.h	Applicant filed for bankruptcy under Chapter 7 in January 1993. His unsecured debts were discharged in April 1993. Applicant maintains this bankruptcy was caused by his unemployment from September 1992 to January 1993, during which time he supported his family with unemployment compensation from the State. Applicant continued to have financial problems after the bankruptcy discharge, apparently because he reaffirmed some debts (e.g., mortgage and car payment) which were in arrears. He claims these financial problems were resolved by 1995 or 1996. However, his separation from his wife in 1996, and continuing health problems (that resulted in his employer changing his status from full-time to part-time), eventually led to new financial difficulties in 1998. These financial difficulties led applicant to a consumer counseling agency in 1999 where many of his debts were consolidated and eventually satisfied. This helped applicant keep his financial difficulties somewhat under control until he was laid off from a relatively well paying job in June 2001. His unemployment from June 15 to November 11, 2001 resulted in his most recent financial problems (e.g., car repossession, house foreclosure). Since finding new employment in November 2001, it appears, at least on paper, (1) that applicant has his current financial situation under control.	Against Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—

Allegation

Finding

Type

Response

Disqualifying (¶19)

Mitigating applied (¶20)

Mitigation

1.a

Applicant admits that he is indebted to this creditor for an account opened in August 2001. In his response to the SOR, applicant stated that the debt would be satisfied by two payments: the first in the amount of $67.51 on July 25, 2002, and the second in the amount of $67.00 by September 1, 2002. Since he offered no proof that either payment was made, I find that applicant is still indebted to this creditor.

$134

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.b

Applicant claims this debt was paid and attached a document to his SOR response that indicates a zero balance on a debt to this creditor. Given this evidence, I find that applicant is no longer indebted to this creditor.

For Applicant

Unspecified Financial

Denied

—

1.c

Applicant admits that he is indebted to this creditor for an account opened in October 2000. He apparently negotiated the debt down to $55.00, and has until September 1, 2002 to pay it. He states in his response to the SOR that he will satisfy the debt by September 1, 2002.

$55

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.d

In January 2002, applicant allowed his Mercedes Benz to be voluntarily repossessed because he could no longer afford the $674.13 monthly payments. After the creditor repossessed and sold the car, applicant was left with a $20,000.00 debt. Applicant states in his response to the SOR that he made arrangements with the creditor requiring him to make monthly payments of at least $250.00 until the debt is satisfied.

$20,000

Against Applicant

Auto Loan Debt

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.e

In February 2002, applicant's house was foreclosed upon and auctioned off.

Against Applicant

Mortgage or Home Loan Debt

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.f

Applicant entered into a debt consolidation agreement with a consumer credit counseling service in November 1999 that covered approximately $7,059.00 in debt.

$7,059

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.g

In November 1998, applicant's employer notified DoD that prior to applicant's resignation from the company in October 1998, a report was being prepared concerning applicant's "extreme financial instability and debt" as evidenced by the following: - Applicant requested a withdrawal of his entire 401K account balance ($1,285.00) due to extreme financial hardship; namely, his bank was beginning a foreclosure action. - Applicant requested advance payments from the company medical reimbursement plan claiming that he owed money to doctors and dentists. - Applicant claimed that he missed work due to illness but did not go to the doctor because he could not afford the co-payment, which was $10.00. - Applicant's check to his employer for insurance premiums was returned for insufficient funds.

$1,285

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.h

Applicant filed for bankruptcy under Chapter 7 in January 1993. His unsecured debts were discharged in April 1993. Applicant maintains this bankruptcy was caused by his unemployment from September 1992 to January 1993, during which time he supported his family with unemployment compensation from the State. Applicant continued to have financial problems after the bankruptcy discharge, apparently because he reaffirmed some debts (e.g., mortgage and car payment) which were in arrears. He claims these financial problems were resolved by 1995 or 1996. However, his separation from his wife in 1996, and continuing health problems (that resulted in his employer changing his status from full-time to part-time), eventually led to new financial difficulties in 1998. These financial difficulties led applicant to a consumer counseling agency in 1999 where many of his debts were consolidated and eventually satisfied. This helped applicant keep his financial difficulties somewhat under control until he was laid off from a relatively well paying job in June 2001. His unemployment from June 15 to November 11, 2001 resulted in his most recent financial problems (e.g., car repossession, house foreclosure). Since finding new employment in November 2001, it appears, at least on paper, (1) that applicant has his current financial situation under control.

Against Applicant

Bankruptcy Filing

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

Loading case…

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

CONCLUSION

FORMAL FINDINGS

DECISION

FOOTNOTES