KEYWORD: Financial; Personal Conduct
DIGEST: Applicant has numerous debts that have been past-due for many years. These debts leave
applicant financially overextended - which puts him squarely within the concern expressed in the
Financial Considerations Guideline of the Directive. Clearance is denied.
CASENO: 06-04084.h1
DATE: 01/18/2007
DATE: January 18, 2007
In Re:
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SSN: ----------- 
Applicant for Security Clearance
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ISCR Case No. 06-04084
DECISION OF ADMINISTRATIVE JUDGE
JOSEPH TESTAN
APPEARANCES
FOR GOVERNMENT
Jennifer I. Goldstein, Department Counsel
FOR APPLICANT
Pro Se
SYNOPSIS
Applicant has numerous debts that have been past-due for many years. These debts leave
applicant financially overextended - which puts him squarely within the concern expressed in the
Financial Considerations Guideline of the Directive. Clearance is denied.
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STATEMENT OF THE CASE
On August 31, 2006, the Defense Office of Hearings and Appeals (DOHA), pursuant to
Executive Order 10865 and Department of Defense Directive 5220.6 (Directive), dated January 2,
1992, issued a Statement of Reasons (SOR) to applicant which detailed reasons why DOHA could
not make the preliminary affirmative finding under the Directive that it is clearly consistent with the
national interest to grant or continue a security clearance for applicant and recommended referral to
an Administrative Judge to determine whether clearance should be denied or revoked.
Applicant responded to the SOR in writing on October 7, 2006. The case was assigned to the
undersigned on November 14, 2006. A Notice of Hearing was issued on November 27, 2006, and
the hearing was held on December 28, 2006. The transcript was received on January 10, 2007.
FINDINGS OF FACT
Applicant is 58 years of age. He has been employed with the same defense contractor since
2004.
SOR Allegation 1a: Applicant filed a Chapter 13 bankruptcy petition in 1995. When he
could no longer make the bankruptcy plan payments, the case was dismissed.
SOR Allegation 1b: In September 1997, applicant filed a second Chapter 13 bankruptcy
petition, listing approximately $90,000.00 in debts. Most of this indebtedness related to a delinquent
mortgage on his home. The bankruptcy case was dismissed in September 1999. Applicant lost the
home through foreclosure in October 1999.
SOR Allegation 1c: In 1999, applicant wrote a check that bounced. When he was informed
of the problem, he made good on the check. He was initially charged with Fraudulent Check, but the
charge was dropped.
Applicant signed up with a debt consolidation company (ECC) in September 2006. His plan
was to pay an initial fee to ECC and then make monthly payments to them. The monthly payments
would then be divided up and forwarded to his various creditors by ECC. Applicant testified that he
paid an initial fee of $141.00 to ECC in September, and believes he made a second payment in the
amount of $280.00 in either September or October. He further testified that he made no payments
to ECC in November or December, and has had no contact with ECC in the last 45 days, because
he has been concentrating on paying his current expenses (TR at 31). He is not sure when he will
make his next payment to ECC, or what the amount of that payment will be. 
SOR Allegation 1d: Applicant admits that he is indebted to Midland in the approximate
amount of $844.00 and that the debt was placed for collection. This is one of the debts that will be
handled by ECC (Exhibit E).
SOR Allegation 1e: Applicant admits that he is indebted to Prime Rate Premium in the
In response to Question 26, he stated he had been charged with writing a bad check. In1
response to Question 33, he admitted filing for bankruptcy. In response to Question 35, he
admitted he had property repossessed. Although he responded “no” to Question 38, in the
General Remarks Section (Question 43) he, in effect, changed his answer to Question 38 from
“no”to “yes,” and then provided details about two of his delinquent debts. And, he responded
“yes” to Question 39, and provided the name of an additional creditor. 
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approximate amount of $346.00, and that the debt was placed for collection in about August 1999.
This debt is being handled by ECC.
SOR Allegation 1f: Applicant had cosigned on a student loan for his son. The debt went
delinquent but has since been satisfied by the son (Exhibit B).
SOR Allegations 1g and 1h: Exhibit C establishes that these IRS debts have been satisfied.
SOR Allegation 1i: Applicant is indebted to this creditor in the approximate amount of
$424.00. This debt was placed for collection in about March 2000, and is being handled by ECC.
SOR Allegation 1j: This past-due student loan debt stood at $5,150.21 as of September 15,
2006 (Exhibit D). Applicant worked out a repayment schedule with the creditor in mid-2006 which
requires him to make monthly payments of $55.00 beginning on August 7, 2006 (Exhibit 2).
SOR Allegation 1k: Applicant is indebted to this creditor in the approximate amount of
$128.00. The account was placed for collection in 2001, and is being handled by ECC.
SOR Allegation 1l: Applicant is indebted to this creditor in the approximate amount of
$199.00. The debt was placed for collection in 2001, and is being handled by ECC.
SOR Allegation 1m: Applicant is indebted to this creditor in the approximate amount of
$200.00. This debt has been delinquent since May 2004, and is being handled by ECC.
SOR Allegation 1n: Applicant satisfied this $236.00 debt (Exhibit F; TR at 36-37).
SOR Allegation1o: Applicant is indebted to this creditor in the approximate amount of
$721.00. This debt was placed for collection in April 2005, and is being handled by ECC.
Applicant testified that he began experiencing financial problems in the 1990s after he was
injured at work. He was out of work for eight to nine months and was unable to collect workers
compensation benefits or any other type of aid. He has been unable to work his way out of his
financial problems since then.
Applicant completed and executed a Security Clearance Application (SCA) in 2004 (Exhibit
1). The Government alleges that he intentionally provided false information about his financial
condition when he responded to Questions 38 and 39. Although applicant’s responses to these two
questions were less than perfect, when his responses to all of the financial questions are viewed as
a whole,  it is clear that he put the Government on notice that he had experienced significant1
 It is not clear if the IRS debts were satisfied by voluntary payments or involuntary2
payments (e.g., applying applicant’s income tax refunds).
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financial problems. I therefore find that applicant did not intend to mislead the Government.
CONCLUSIONS
The evidence establishes that (1) applicant has been experiencing significant financial
difficulties since the 1990s, and (2) he is still indebted to eight creditors for past-due debts in the
approximate total amount of $8,000.00. Applicant’s failure to honor his financial obligations  reflects
adversely on his judgment and reliability, and suggests he cannot be relied upon to safeguard
classified information. With respect to the Financial Considerations guideline, Disqualifying
Conditions E2.A6.1.2.1 (a history of not meeting financial obligations) and E2.A6.1.2.3 (inability
or unwillingness to satisfy debts) are applicable.
Given applicant’s credible testimony concerning how his financial difficulties began, he
qualifies for Mitigating Condition E2.A6.1.3.3 (the conditions that resulted in the behavior were
largely beyond the person’s control).
Applicant has been with his current employer since April 2004. Since then, he has done very
little to address his delinquent debts. Although his two IRS debts  have been satisfied, and he has2
reduced his student loan debt over the years, he did nothing to address the debts listed in SOR
Paragraphs 1d, 1e, 1i, 1k, 1l, 1m and 1o until he contacted ECC in September 2006, after the SOR
was issued. And since contacting ECC and making at most two payments to them, he has stopped
communicating with them. These facts preclude application of Mitigating Condition E2.A6.1.3.6
(the individual has initiated a good-faith effort to repay overdue creditors or otherwise resolve
debts).
At the present time, applicant is having trouble making ends meet. When questioned about
his monthly cash flow, applicant testified that just this month he secured a part time job, which will
provide him with an additional $1,200.00 per month and give him a positive monthly cash flow.
Hopefully this new job works out for applicant. Having just secured it, however, it is too soon to
determine if it will work out and provide applicant the additional income that applicant believes it
will.
Based on the evidence presented, applicant has been experiencing significant financial
difficulties for ten years. These difficulties continue, as evidenced by his inability to follow through
with ECC. Applicant’s financial situation fits squarely within the Financial Guideline Concern
expressed in the Directive (E2.A6.1.1.1 - An individual who is financially overextended is at risk of
having to engage in illegal acts to generate funds.). Based on this fact, I have no choice but to
conclude that it is not now clearly consistent with the national interest for applicant to have access
to classified information.
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FORMAL FINDINGS
PARAGRAPH 1: AGAINST THE APPLICANT
PARAGRAPH 2: FOR THE APPLICANT
DECISION
In light of all the circumstances presented by the record in this case, it is not clearly consistent
with the national interest to grant or continue a security clearance for applicant.
Joseph Testan
Administrative Judge