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ISCR Case 04-04184.h1 — CASE

ISCR Case 04-04184.h1granted

Case Headnote

ISCR Case No. 04-04184.h1

grantedApr 19, 2006· Hon. James A. Young· hearing

Summary

A 49-year-old U.S. Army retiree, working as a test operations section logistician, was granted a security clearance despite a history of financial difficulties under Guideline F (Financial Considerations). The Statement of Reasons detailed multiple debts exceeding $13,700 in collection status, a charged-off debt over $1,000, and a delinquent debt of $117. Additionally, the applicant had filed for Chapter 13 bankruptcy in June 1991 and Chapter 7 bankruptcy in September 2005.

Disqualifying conditions related to financial irresponsibility were raised due to these issues. However, the judge applied mitigating conditions, recognizing the applicant's efforts to address his financial situation.

The clearance was granted because the applicant demonstrated a good-faith effort to resolve his debts through bankruptcy. He also received a salary increase and established a budget to manage his finances effectively. The judge concluded that the applicant understood the importance of financial responsibility for security clearance eligibility, finding the grant consistent with national interest.

Why the Applicant Prevailed

The applicant made a good-faith effort to resolve his debts through bankruptcy.
He has received a salary increase and established a budget to manage his finances.
The applicant understands the importance of maintaining financial responsibility for security clearance eligibility.

Conditions Referenced

Disqualifying

E2.A6.1.2.1raisedFinancial Considerations - History of Not Meeting Financial Obligations
E2.A6.1.2.3raisedFinancial Considerations - Unable or Unwilling to Satisfy Debts

Mitigating

E2.A6.1.3.6appliedFinancial Considerations - Good-faith Effort to Resolve Debts

Key Rule Quoted

“An applicant who is financially overextended is at risk of having to engage in illegal acts to generate funds.”

Procedural Posture

SOR issuedMay 25, 2005
Answer filedJun 17, 2005
Hearing heldMar 14, 2006
Decision dateApr 19, 2006

Cite For

Good-faith Efforts in Resolving Financial Issues Under Guideline F
Impact of Salary Increases on Financial Stability for Security Clearance
Importance of Budgeting in Maintaining Financial Responsibility for 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.

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: Decision on RecordDecided: granted

The applicant faced financial difficulties, including debts totaling over $13,700 and a charged-off debt exceeding $1,000. He resolved these issues through Chapter 13 and Chapter 7 bankruptcies, demonstrating a commitment to financial responsibility, which led to the granting of his security clearance.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation
1.a	Debts totaling more than $13,700 in collection status $13,700	For Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved	—
1.b	Debts totaling more than $13,700 in collection status $13,700	For Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved	—
1.c	A debt for more than $1,000 that was charged off as a bad debt $1,000	For Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved	—
1.d	Debts totaling more than $13,700 in collection status $13,700	For Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved	—
1.e	Debts totaling more than $13,700 in collection status $13,700	For Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved	—
1.f	Debts totaling more than $13,700 in collection status $13,700	For Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved	—
1.g	A delinquent debt of $117 $117	For Applicant	Unspecified Financial	Admitted	(b) unwillingness to satisfy debts regardless of ability (c) a history of not meeting financial obligations	(c) received/receiving counseling; problem being resolved	—
1.h	You filed for Chapter 7 bankruptcy on or about September 2005	For Applicant	Bankruptcy Filing	Admitted	—	(c) received/receiving counseling; problem being resolved	—
1.i	You filed for Chapter 13 bankruptcy on or about June 14, 1991	For Applicant	Bankruptcy Filing	Admitted	—	(c) received/receiving counseling; problem being resolved	—

Descriptive standardized rendering of a decided public case (Guideline F). The verbatim source decision is shown in full below.

Full decision

The complete, official text — footnotes and signatures included — is in the original PDF.

Decision text, by section

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

SYNOPSIS

KEYWORD: Financial

DIGEST: Applicant suffered financial problems in the early 1990s. He resolved those debts through a Chapter 13 bankruptcy. Since 1998, he incurred other delinquent debts. After his attempts to set up payment plans with his creditors failed, Applicant filed for Chapter 7 bankruptcy and his debts were discharged in January 2006. Applicant received a recent increase in pay, has a budget, and understands the serious consequences that will result from a failure to keep his financial house in order. Clearance is granted.

CASE NO: 04-04184.h1

DATE: 04/19/2006

DATE: April 19, 2006

In re:

------------------

SSN: -----------

Applicant for Security Clearance

ISCR Case No. 04-04184

DECISION OF ADMINISTRATIVE JUDGE

JAMES A. YOUNG SYNOPSIS

Applicant suffered financial problems in the early 1990s. He resolved those debts through a Chapter 13 bankruptcy. Since 1998, he incurred other delinquent debts. After his attempts to set up payment plans with his creditors failed, Applicant filed for Chapter 7 bankruptcy and his debts were discharged in January 2006. Applicant received a recent increase in pay, has a budget, and understands the serious consequences that will result from a failure to keep his financial house in order. Clearance is granted.

STATEMENT OF CASE

The Defense Office of Hearings and Appeals (DOHA) declined to grant or continue a security clearance for Applicant. In accordance with Department of Defense Directive 5220.6 ¶ E3.1.2 (Jan 2. 1992), as amended, DOHA issued a Statement of Reasons (SOR) on 25 May 2005 detailing the basis for its decision-security concerns raised under Guideline F (Financial Considerations) of the Directive. Applicant answered the SOR in writing on 17 June 2005 and elected to have a hearing before an administrative judge. The case was originally assigned to another judge but reassigned to me on 14 February 2006. On 14 arch 2006, I convened a hearing to consider whether it is clearly consistent with the national interest to grant or continue a security clearance for Applicant. DOHA received the hearing transcript (Tr.) on 24 March 2006.

Department Counsel moved to amend the SOR on 4 January 2006. As Applicant had no objections, the motion was granted to add two subparagraphs as follows:

1.h. You filed for Chapter 7 bankruptcy on or about September 2005.

1.g. You filed for Chapter 13 bankruptcy on or about June 14, 1991.

FINDINGS OF FACT

Applicant is a 49-year-old test operations section logistician for a defense contractor. He served on active duty in the U.S. Army from 1973-93, retiring as a staff sergeant (E-6). His supervisors report Applicant is an excellent and reliable worker whom they fully trust.

In the SOR, DOHA alleged Applicant has debts totaling more than $13,700 in collection status, a debt for more than $1,000 that was charged off as a bad debt, and a delinquent debt of $117. In his Answer, Applicant admitted each of the allegations.

Applicant divorced his first wife in 1985. He gained custody of their two children and raised them on his own. He married his present wife in 1989. She brought four children into the marriage. Applicant began to experience financial difficulties with the additional mouths to feed. He was immature and mismanaged his money. He filed a Chapter 13 bankruptcy petition in 1991. He successfully completed the wage-earner's plan in 1994, the year following his retirement from the Army.

For the past year, Applicant's stepson and the stepson's two children live with Applicant and his wife. The stepson suffers from seizures and is going to have brain surgery in April 2006. Although Medicaid will pay for the operation, Applicant provides financial support for the other needs of his stepson and "grandchildren." He believes his son will be back on his feet and able to return to his job within a few months of his surgery.

As of a year ago, Applicant owed almost $15,000 in delinquent debts, some delinquent as far back as 1998. In July 2005, his salary was raised to $3,000 a month. His military retirement is approximately $1,000 a month. He attempted to setup payment plans with some of his creditors. When that failed, he filed for Chapter 7 bankruptcy in September 2005. All of the debts listed in the SOR were discharged on 13 January 2006. In February 2006, Applicant replaced his wife's car with a 2005 model-year van for $21,000, so she could provide transportation for her son and grandchildren. Applicant makes $455 a month payments on it. However, he has finished paying on his own car, so the new payments do not impose any added burden on his finances. Applicant and his wife have a budget. He has not sought any financial counseling since he retired from the military.

Applicant has about $2,500 in a savings account The couple no longer have any credit cards. He has a 401(k) plan of about $6,000. He is paying back a $1,000 loan from the 401(k) at the rate of $50 a month. His wife does not work outside their home.

POLICIES

"[N]o one has a 'right' to a security clearance." Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). As Commander in Chief, the President has "the authority to . . . control access to information bearing on national security and to determine whether an individual is sufficiently trustworthy to occupy a position . . . that will give that person access to such information." Id. at 527. The President authorized the Secretary of Defense or his designee to grant applicants eligibility for access to classified information "only upon a finding that it is clearly consistent with the national interest to do so." Exec. Or. 10865, Safeguarding Classified Information within Industry § 2 (Feb. 20, 1960). Eligibility for a security clearance is predicated upon the applicant meeting the security guidelines contained in the Directive. An applicant "has the ultimate burden of demonstrating that it is clearly consistent with the national interest to grant or continue his security clearance." ISCR Case No. 01-20700 at 3.

Enclosure 2 of the Directive sets forth personnel security guidelines, as well as the disqualifying conditions (DC) and mitigating conditions (MC) under each guideline. In evaluating the security worthiness of an applicant, the administrative judge must also assess the adjudicative process factors listed in ¶ 6.3 of the Directive. The decision to deny an individual a security clearance is not necessarily a determination as to the loyalty of the applicant. See Exec. Or. 10865 § 7. It is merely an indication the applicant has not met the strict guidelines the President and the Secretary of Defense have established for issuing a clearance.

CONCLUSION

In the SOR, DOHA alleged Applicant has debts totaling more than $13,700 in collection status (¶¶ 1.a, 1.b, 1.d-1.f), a debt for more than $1,000 that was charged off as a bad debt (¶ 1.c), and a delinquent debt of $117 (¶ 1.g). In his Answer, Applicant admitted each of the allegations. The SOR was amended to allege Applicant filed for Chapter 13 bankruptcy in 1991 (¶ 1.i) and Chapter 7 bankruptcy in September 2005 (¶ 1.h). An applicant who is financially overextended is at risk of having to engage in illegal acts to generate funds. Directive ¶ E2.A6.1.1.

The Government established each of the allegations in the SOR. Applicant has a history of not meeting his financial obligations (DC E2.A6.1.2.1.) and was unable or unwilling to satisfy his debts (DC E2.A6.1.2.3.). On the other hand, I conclude Applicant made a good-faith effort to resolve his debts. MC E2.A6.1.3.6. He requested assistance from creditors in an effort to setup payment plans. When the creditors failed to respond, he applied for bankruptcy. Applicant has finally gotten his financial house in order and understands the necessity of staying solvent if he wishes to obtain and maintain a security clearance. His bankruptcy has resolved his delinquent debts. His salary increase from last year should make it easier for him to meet his financial obligations. After considering all of the evidence, the disqualifying and mitigating conditions, and the adjudicative process factors, I find for Applicant.

FORMAL FINDINGS

The following are my conclusions as to each allegation in the SOR:

Paragraph 1. Guideline F: FOR APPLICANT

Subparagraph 1.a: For Applicant

Subparagraph 1.b: For Applicant

Subparagraph 1.c: For Applicant

Subparagraph 1.d: For Applicant

Subparagraph 1.e: For Applicant

Subparagraph 1.f: For Applicant

Subparagraph 1.g: For Applicant

Subparagraph 1.h: For Applicant

Subparagraph 1.i: For Applicant

DECISION

In light of all of the circumstances in this case, it is clearly consistent with the national interest to grant or continue a security clearance for Applicant. Clearance is granted. JAMES A. YOUNG

Administrative Judge

FOOTNOTES

APPEARANCES

FOR GOVERNMENT Francisco J. Mendez Jr., Esq., Department Counsel file:///usr.osd.mil/...yComputer/Desktop/DOHA%20transfer/DOHA-Kane/dodogc/doha/industrial/Archived%20-%20HTML/04-04184.h1.htm[7/2/2021 3:28:37 PM] FOR APPLICANT Pro Se