ISCR Case 02-27315.h1

Case Headnote

ISCR Case No. 02-27315.h1

deniedMay 14, 2003· Hon. Elizabeth M. Matchinski· hearing

Summary

A 47-year-old grinder employed by a defense contractor was denied a security clearance under Guideline F (Financial Considerations) due to extensive and recent financial issues. These problems stemmed from a 1998 layoff, leading to approximately $60,000 in delinquent debts.

Specific allegations included a $50,000 mortgage, taken out in October 1991, which resulted in a May 1999 foreclosure and a $34,024.38 deficiency judgment. Income tax refunds were intercepted twice to partially repay this debt, which had a balance of about $1,290.00 as of November 2002. Other issues included a $1,417.00 civil judgment from January 1999, which was paid off, and unpaid local motor vehicle taxes for multiple years. Additionally, a $291.00 account was closed by August 1999, and a 1993 sedan loan led to repossession and an $8,247.00 deficiency balance. Several other debts, totaling $3,310.00, $6,882.00, and $1,249.00, were charged off or placed for collection.

Despite some efforts, including partial payments and plans for bankruptcy, the judge found that the applicant had not made sufficient progress in addressing his debts after being rehired. The denial was based on the unresolved financial delinquencies, the recent and extensive nature of the problems, and a history of not meeting financial obligations.

Why the Applicant Was Denied

The applicant has unresolved financial delinquencies totaling approximately $60,000.
The applicant's financial problems are recent and extensive, with a history of not meeting financial obligations.
The applicant failed to demonstrate sufficient progress in addressing his debts after being rehired by the defense contractor.

Conditions Referenced

Disqualifying

E2.A6.1.2.1raisedA History of Not Meeting Financial Obligations
E2.A6.1.2.3raisedInability or Unwillingness to Satisfy Debts

Mitigating

E2.A6.1.3.3appliedThe Conditions That Resulted in the Behavior Were Largely Beyond the Person's Control (e.g. Loss of Employment)
E2.A6.1.3.6rejectedThe Individual Initiated a Good-faith Effort to Repay Overdue Creditors or Otherwise Resolve DebtsThe applicant's efforts were insufficient given the extent of the debts.

Key Rule Quoted

“Under the provisions of Executive Order 10865 as amended and the Directive, a decision to grant or continue an applicant's clearance may be made only upon an affirmative finding that to do so is clearly consistent with the national interest.”
— Executive Order 10865

Procedural Posture

SOR issuedNov 5, 2002
Answer filedNov 21, 2002
Hearing heldFeb 26, 2003
Decision dateMay 14, 2003

Cite For

Denial of Security Clearance Due to Unresolved Financial Delinquencies
Impact of Recent Financial Issues on Security Clearance Eligibility
Insufficient Evidence of Good-faith Efforts 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	Applicant stopped payment of his $50,000.00 mortgage, which he had taken out in October 1991, to be repaid at $508.00 per month. The property was foreclosed on in May 1999, and sold at an auction. In early July 1999, the mortgage lender obtained a deficiency judgment against Applicant in the amount of $34,024.38. $34,024	Against Applicant	Mortgage or Home Loan Debt	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.b	Applicant's income tax refunds were intercepted twice in partial repayment of the debt, which had a balance of about $1,290.00 as of November 2002. $1,290	For Applicant	Tax Unpaid	Unknown	—	—	—
1.c	In early January 1999, the lender obtained a civil judgment against Applicant in the amount of $1,417.00. Ordered by the court to repay the judgment at the rate of $25.00 per week, Applicant paid off the debt. $1,417	For Applicant	Judgment Against Applicant	Unknown	—	—	—
1.d	Applicant failed to pay his local motor vehicle taxes for tax years 1990, 1994, 1995, and 1997 when he had the financial means to pay them.	For Applicant	Tax Filing Failure	Unknown	(a) inability to satisfy debts	—	—
1.e	By August 1999, the account was $291.00 past due and closed by the creditor. $291	For Applicant	Credit Card Debt	Unknown	—	—	—
1.f	Applicant financed a 1993 model year sedan for about $4,000.00, with repayment at $50.00 per month. The payments were not kept up, and the car was repossessed circa early 2000. Since he had cosigned on the loan, Applicant was responsible for the deficiency balance of $8,247.00. $8,247	Against Applicant	Auto Loan Debt	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.g	The debt was charged off to profit and loss in the amount of $3,310.00. $3,310	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.h	The debt was charged off to profit and loss in the amount of $6,882.00. $6,882	Against Applicant	Unspecified Financial	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.i	Applicant was unable to keep up with a repayment plan established by the creditor, and a $1,249.00 balance was charged off in 1999. $1,249	Against Applicant	Utility or Phone Debt	Unknown	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.j	In January 2000, the account was placed for collection in the amount of $6,882.00. $6,882	Against Applicant	Unspecified Financial	Unknown	(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 stopped payment of his $50,000.00 mortgage, which he had taken out in October 1991, to be repaid at $508.00 per month. The property was foreclosed on in May 1999, and sold at an auction. In early July 1999, the mortgage lender obtained a deficiency judgment against Applicant in the amount of $34,024.38.

$34,024

Against Applicant

Mortgage or Home Loan Debt

Unknown

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.b

Applicant's income tax refunds were intercepted twice in partial repayment of the debt, which had a balance of about $1,290.00 as of November 2002.

$1,290

For Applicant

Tax Unpaid

Unknown

—

1.c

In early January 1999, the lender obtained a civil judgment against Applicant in the amount of $1,417.00. Ordered by the court to repay the judgment at the rate of $25.00 per week, Applicant paid off the debt.

$1,417

For Applicant

Judgment Against Applicant

Unknown

—

1.d

Applicant failed to pay his local motor vehicle taxes for tax years 1990, 1994, 1995, and 1997 when he had the financial means to pay them.

For Applicant

Tax Filing Failure

Unknown

(a) inability to satisfy debts

—

1.e

By August 1999, the account was $291.00 past due and closed by the creditor.

$291

For Applicant

Credit Card Debt

Unknown

—

1.f

Applicant financed a 1993 model year sedan for about $4,000.00, with repayment at $50.00 per month. The payments were not kept up, and the car was repossessed circa early 2000. Since he had cosigned on the loan, Applicant was responsible for the deficiency balance of $8,247.00.

$8,247

Against Applicant

Auto Loan Debt

Unknown

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.g

The debt was charged off to profit and loss in the amount of $3,310.00.

$3,310

Against Applicant

Unspecified Financial

Unknown

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.h

The debt was charged off to profit and loss in the amount of $6,882.00.

$6,882

Against Applicant

Unspecified Financial

Unknown

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.i

Applicant was unable to keep up with a repayment plan established by the creditor, and a $1,249.00 balance was charged off in 1999.

$1,249

Against Applicant

Utility or Phone Debt

Unknown

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.j

In January 2000, the account was placed for collection in the amount of $6,882.00.

$6,882

Against Applicant

Unspecified Financial

Unknown

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

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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

FINDINGS OF FACT

POLICIES

CONCLUSION

FORMAL FINDINGS

DECISION

FOOTNOTES