ISCR Case 02-31506.h1

Case Headnote

ISCR Case No. 02-31506.h1

deniedApr 13, 2005· Hon. Joseph Testan· hearing

Summary

A 45-year-old defense contractor employee was denied a security clearance due to concerns under Guideline E (Personal Conduct) and Guideline F (Financial Considerations). The denial stemmed from a long history of financial difficulties and the applicant's refusal to sign releases for credit checks.

The applicant filed for Chapter 13 bankruptcy in 1991, receiving a discharge in 1994. A second Chapter 13 petition was filed in May 1998, which was dismissed in December 1998 for failure to make plan payments. A Chapter 7 bankruptcy followed in 1999, resulting in a discharge that September. Despite these actions, the applicant remained indebted to GMAC for approximately $8,945.64, a debt for which he has since made agreed-upon payments. However, the applicant also admitted to a $609 debt to another creditor, but failed to provide proof of payments, despite stating he would make them.

A key factor in the denial was the applicant's refusal in June 2002 to sign releases allowing the Defense Security Service (DSS) to obtain credit records from five creditors. The applicant stated he would not contact two creditors if they were not pursuing collection, and simply did not want the other three contacted. The judge concluded that the applicant's long history of not meeting financial obligations, coupled with his refusal to sign releases, hindered the government's ability to verify his financial situation and demonstrated a lack of reformation or good faith efforts to address his debts. Consequently, the application was denied.

Why the Applicant Was Denied

Applicant has a long history of not meeting financial obligations.
Applicant's refusal to sign releases hindered the government's ability to verify his financial situation.
Applicant failed to demonstrate reformation or good faith efforts to address his debts.

Conditions Referenced

Disqualifying

E2.A5.1.1.2appliedRefusal to Complete Required Security Forms, Releases . . . in Connection with a Personnel Security Determination
E2.A6.1.2.1raisedA History of Not Meeting Financial Obligations
E2.A6.1.2.3raisedInability or Unwillingness to Satisfy Debts

Key Rule Quoted

“Although Bankruptcy is a legal way to avoid paying just debts, in this case it does not constitute a good-faith effort to repay overdue creditors or otherwise resolve debts.”

Procedural Posture

SOR issuedOct 16, 2003
Answer filedNov 6, 2003Applicant elected to have case determined on written record.
Hearing held—No hearing; case determined on written record.
Decision dateApr 13, 2005

Cite For

Denial Based on Financial Irresponsibility Under Guideline F
Impact of Refusal to Sign Releases on Security Clearance Determination Under Guideline E
Insufficient Evidence of Reformation in Financial Conduct.

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	Applicant refused to sign releases to allow DSS to obtain his credit records from five of his creditors.	Against Applicant	Failure to Cooperate with Security Processing	—	Denied	(a) deliberate omission, concealment, or falsification on a security form	—	—
1.a–1.j	10 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)	Against Applicant		—		—	—	—

Allegation

Finding

Conduct

Concealed Issue

Response

Disqualifying (¶16)

Mitigating applied (¶17)

Mitigation

2.a

Applicant refused to sign releases to allow DSS to obtain his credit records from five of his creditors.

Against Applicant

Failure to Cooperate with Security Processing

—

Denied

(a) deliberate omission, concealment, or falsification on a security form

—

1.a–1.j

10 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)

Against Applicant

—

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Applicant filed a Chapter 13 Bankruptcy petition in early 1991. He filed it after he had relocated to a different State and found it difficult finding employment. He believed at the time that a Chapter 13 Bankruptcy was his only option "due to excessive debt at that time." It appears that applicant made all the payments required by the Bankruptcy Trustee, and he received a Discharge from the Bankruptcy Court in 1994.	Against Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.b	Applicant filed a Chapter 13 Bankruptcy petition in May 1998 "in an honest effort to pay [his] debt after 6 months of unemployment." In December 1998, the Court dismissed the case without prejudice after applicant "failed to make plan payments as ordered." In 1999, a Chapter 7 Bankruptcy Petition was filed. It is unclear if this was a new action or a "conversion" of applicant's Chapter 13 case. In any event, he received a Discharge in September 1999.	Against Applicant	Bankruptcy Filing	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.c	specific text not stated in this decision	Against Applicant	Unspecified Financial	Unknown	—	—	—
1.d	Applicant is indebted to GMAC in the approximate amount of $8,945.64. Applicant claims he became indebted to this creditor due to a 2001 layoff. When he was unable to renegotiate the loan with the creditor both before and after the layoff, he turned the truck over to the creditor. GMAC sold it at auction, and then worked out a payment plan with applicant for the difference. Applicant has made the plan payments as agreed. $8,945	Against Applicant	Auto Loan Debt	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.e–1.g	3 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)	Against Applicant			—	—	—
1.h	Applicant admits he is indebted to this creditor in the amount of $609.00. In his response to the SOR, he stated he contacted the collection agency handling the debt, and although they would not agree to a payment plan, they would accept monthly payments from him. He further stated he "will be making monthly payments now." In his response to the FORM, provided about seven months later, applicant offered proof that he has been making payments on the GMAC debt, but offered no proof he began making payments to this creditor. I find applicant has not made any payments to this creditor. $609	Against Applicant	Unspecified Financial	Admitted	(a) inability to satisfy debts (b) unwillingness to satisfy debts regardless of ability	—	—
1.i	specific text not stated in this decision	Against Applicant	Unspecified Financial	Unknown	—	—	—
1.j	This debt was discharged by the Bankruptcy Court in 1999.	Against Applicant	Bankruptcy Filing	Admitted	—	—	—
2.a	Applicant was interviewed by a Special Agent of the DSS in June 2002. At the time, applicant refused to sign releases to allow DSS to obtain his credit records from five of his creditors. His stated reason for refusing to sign the releases for two creditors was: [I]f they are not pursuing collection against me, I am not going to contact them. As to the other three creditors, he merely stated he did not want them to be contacted.	Against Applicant	Unspecified Financial	Denied	(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 filed a Chapter 13 Bankruptcy petition in early 1991. He filed it after he had relocated to a different State and found it difficult finding employment. He believed at the time that a Chapter 13 Bankruptcy was his only option "due to excessive debt at that time." It appears that applicant made all the payments required by the Bankruptcy Trustee, and he received a Discharge from the Bankruptcy Court in 1994.

Against Applicant

Bankruptcy Filing

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.b

Applicant filed a Chapter 13 Bankruptcy petition in May 1998 "in an honest effort to pay [his] debt after 6 months of unemployment." In December 1998, the Court dismissed the case without prejudice after applicant "failed to make plan payments as ordered." In 1999, a Chapter 7 Bankruptcy Petition was filed. It is unclear if this was a new action or a "conversion" of applicant's Chapter 13 case. In any event, he received a Discharge in September 1999.

Against Applicant

Bankruptcy Filing

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.c

specific text not stated in this decision

Against Applicant

Unspecified Financial

Unknown

—

1.d

Applicant is indebted to GMAC in the approximate amount of $8,945.64. Applicant claims he became indebted to this creditor due to a 2001 layoff. When he was unable to renegotiate the loan with the creditor both before and after the layoff, he turned the truck over to the creditor. GMAC sold it at auction, and then worked out a payment plan with applicant for the difference. Applicant has made the plan payments as agreed.

$8,945

Against Applicant

Auto Loan Debt

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.e–1.g

3 sub-charges — specific text not stated in this decision (against the applicant). (low confidence)

Against Applicant

—

1.h

Applicant admits he is indebted to this creditor in the amount of $609.00. In his response to the SOR, he stated he contacted the collection agency handling the debt, and although they would not agree to a payment plan, they would accept monthly payments from him. He further stated he "will be making monthly payments now." In his response to the FORM, provided about seven months later, applicant offered proof that he has been making payments on the GMAC debt, but offered no proof he began making payments to this creditor. I find applicant has not made any payments to this creditor.

$609

Against Applicant

Unspecified Financial

Admitted

(a) inability to satisfy debts

(b) unwillingness to satisfy debts regardless of ability

—

1.i

specific text not stated in this decision

Against Applicant

Unspecified Financial

Unknown

—

1.j

This debt was discharged by the Bankruptcy Court in 1999.

Against Applicant

Bankruptcy Filing

Admitted

—

2.a

Applicant was interviewed by a Special Agent of the DSS in June 2002. At the time, applicant refused to sign releases to allow DSS to obtain his credit records from five of his creditors. His stated reason for refusing to sign the releases for two creditors was: [I]f they are not pursuing collection against me, I am not going to contact them. As to the other three creditors, he merely stated he did not want them to be contacted.

Against Applicant

Unspecified Financial

Denied

(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

STATEMENT OF CASE

FINDINGS OF FACT

CONCLUSION

FORMAL FINDINGS

DECISION

FOOTNOTES