KEYWORD: Financial; Personal Conduct
DIGEST: Applicant’s recurrent financial difficulties that precipitated the filing of a second
bankruptcy in 2005 generate a security concern. Since incurring the debts that precipitated the
bankruptcy, she has obtained a steady, well-paying job that has enabled her to make payments toward
the satisfaction of her outstanding delinquencies through a Chapter 13 payment plan without
interruption for the past 18 months, while comfortably managing her other monthly expenses. She
has mitigated the security concern. Clearance is granted. 
CASENO: 06-15191.h1
DATE: 04/20/2007
DATE:  April 20, 2007
In re:
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SSN: -----------
Applicant for Security Clearance
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ISCR Case No. 06-15191
DECISION OF ADMINISTRATIVE JUDGE
MARC E. CURRY
APPEARANCES
FOR GOVERNMENT
Ray T. Blank, Jr., Department Counsel
FOR APPLICANT
Mitchell Adams, Personal Representative
SYNOPSIS
This action was taken under Executive Order 10865, dated February 20, 1960, as amended, and DoD Directive1
5220.6, dated January 2,1992, as amended and modified (Directive).
Exhibit G, Supervisor’s Reference Letter (undated).2
Tr. 89.3
2
Applicant’s recurrent financial difficulties that precipitated the filing of a second bankruptcy
in 2005 generate a security concern. Since incurring the debts that precipitated the bankruptcy, she
has obtained a steady, well-paying job that has enabled her to make payments toward the satisfaction
of her outstanding delinquencies through a Chapter 13 payment plan without interruption for the past
18 months, while comfortably managing her other monthly expenses. She has mitigated the security
concern. Clearance is granted.
STATEMENT OF THE CASE
On November 21, 2006, the Defense Office of Hearings and Appeals (DOHA) issued to
Applicant a Statement of Reasons (SOR) stating it was unable to find it clearly consistent with the
national interest to grant or continue a security clearance.  Applicant answered it on December 12,1
2006, and requested a hearing. 
The case was assigned to me on January 10, 2007. DOHA issued a notice of hearing on
February 27, 2007, scheduling it for March 13, 2007. The hearing was held as scheduled. During the
hearing, I received five government exhibits, five Applicant exhibits, and the testimony of two
Applicant witnesses. At the conclusion of the hearing, I left the record open through March 27, 2007
for Applicant to submit additional exhibits. That day, she submitted five additional exhibits.
Department Counsel did not object to their admissibility. I then marked them as Applicant’s Exhibits
I through M, and incorporated them into the record. DOHA received the transcript on March 23,
2007.
FINDINGS OF FACT 
Applicant’s admissions are incorporated as findings of fact. In addition, I make the following
findings of fact.
Applicant is a 39-year-old married woman with two children, ages 15 and 4. She has a high
school diploma. For the past three years, she has worked as a process inspection operator. Her duties
include, among other things, quality control, and employee training. She is an exemplary employee
who is highly respected by her coworkers.2
In early 2000, Applicant’s quit her full-time job and took a part-time job in order to care for
her ailing mother.  Although she obtained another full-time job a few months later, she only made3
Id.4
Tr. 73.5
Tr. 75-76.6
See generally,, Summary of Schedules, dated February 9, 2001, as included in Exhibit M, Bankruptcy Records,7
at 14.The amount discharged is the difference between the total liabilities, as listed at the bottom of the summary of
schedules, and the amount of her mortgage and car note, both of which she re-affirmed.
Exhibit M at 3; Security Clearance Application, dated July 29, 2005.8
Tr. 79-80.9
Tr. 89.10
Exhibit A, Interim Statement as of September 23, 2006, at 1.11
Id.; Exhibit K, Interim Statement as of March 15, 2007, at 1.12
3
half the income than she earned at her previous full-time job.  At or about the time she obtained the4
new job, her husband was severely burned in a household accident, rendering him unable to work
for six months.5
Subsequently, Applicant and her husband grew delinquent on their debts. They met with a
financial counselor who advised them to consider filing for bankruptcy.  On or about February 15,6
2001, they filed for Chapter 7 bankruptcy. On May 22, 2001, they obtained a discharge of
approximately $42,100 of delinquent debt,  including the one listed in subparagraph 1.c.7 8
Applicant’s husband returned to work approximately one month before filing for bankruptcy.
In late 2001, he injured himself on the job. For the next three years, the injury severely limited his
wage-earning capacity, because he could no longer perform his previous job duties.  Although9
Applicant during this period had begun working a full-time job in addition to the part-time job she
had taken when her mother grew ill, she was still making less than she did before quitting h the job
she held in 1999.10
Applicant and her husband again accrued significant financial delinquencies. In 2003,
Applicant’s husband received a $65,000  worker’s compensation settlement. He spent approximately
$25,000 of the settlement on the purchase of a recreational vehicle and an automobile. Applicant
spent the remainder of the settlement money primarily on routine expenses. Because her husband
remained unable to find full-time work throughout the rest of the year, they were unable to make
significant progress toward the satisfaction of their delinquent debt.
On approximately June 17, 2005, Applicant and her husband filed for Chapter 13 bankruptcy
protection. Approximately $16,000 of debt is included in the court-ordered payment plan, including
the debts listed in subparagraphs 1.a. and 1.b.   For the past 18 months, they have been paying the11
trustee $30 per week. They have not missed any payments, and are on schedule to satisfy the
delinquencies over the next 33 months.12
Exhibit 5, Credit Bureau Report, dated November 14, 2006.13
Compare Applicant’s 2004 IRS Form W-2 with her 2005 IRS Form W-2, at pages 14-15 of Exhibit L.14
Exhibit 3, Personal Financial Statement, signed November 10, 2005.15
Tr. 29; see also Exhibit 2, SF-86 electronically submitted February 2, 2004.16
Tr. 31-38.17
Tr. 32.18
Tr. 49.19
4
Applicant has stayed current on all of her other debts, including two home mortgages, while
making her Chapter 13 bankruptcy payments.  Between 2004 and 2005, Applicant’s income nearly13
doubled.  During that time, her husband was successfully able to obtain a full-time job. Currently,14
she has approximately $232 of income remaining after all monthly expenses have been paid.15
Applicant completed a security clearance application (SF 86) in July 2005. In response to
Question 33 (Your Financial Record - Bankruptcy - In the last 7 years, have you filed a petition
under any chapter of the bankruptcy code (to include Chapter 13)?), she listed the 2001 bankruptcy,
but not the 2005 bankruptcy. According to the facility security officer (FSO) at Applicant’s company,
she originally completed an SF 86 in February 2004, and submitted it through her employer to
Defense Security Services (DSS), the agency handling the security clearance investigative function
at the time.  DSS never opened an investigation before their investigative function was transferred16
to the U.S. Office of Personnel Management (OPM). When OPM assumed the function, it requested
the management at Applicant’s company to resubmit any security clearance applications that had
been pending immediately before the transfer. It was unclear whether they wanted the employees to
update the information.  The FSO at the time, returned the applications to Applicant and the other17
employees similarly situated, instructed them to sign them again, but did not instruct them to update
any information.18
Applicant’s second bankruptcy occurred after she submitted the first SF 86. Consistent with
instructions from management, she re-signed the copy of the SF-86 submitted the previous year, and
did not update it.19
Applicant also did not list any of the SOR debts in response to Question 38 (Your Financial
Delinquencies - 180 Days - In the last 7 years, have you been over 180 days delinquent on any
debt?), and Question 39 (Your Financial Delinquencies - 90 days - Are you currently over 90 days
past due on any debt(s)). SOR subparagraphs 1.a. and 1.b. were included in the Chapter 13
bankruptcy filed in June 2005. There is no evidence on file that they were 90 or more days
delinquent in 2004 when Applicant originally completed the SF 86. SOR subparagraph 1.c. was
discharged in the Chapter 7 bankruptcy in 2001.
POLICIES
See generally, Directive, Sec. 2.3, Sec. 2.5.3, Sec. 3.2, and Sec. 4.2.20
5
Enclosure 2 of the Directive sets forth adjudicative guidelines which must be considered in
the evaluation of security suitability. In addition to brief introductory explanations for each guideline,
the adjudicative guidelines are divided into those that may be considered in deciding whether to deny
or revoke an individual’s eligibility for access to classified information (disqualifying conditions)
and those that may be considered in deciding whether to grant an individual’s eligibility for access
to classified information (mitigating conditions).
Because the entire process is a scrutiny of a number of variables known as the “whole person
concept,” all available, reliable information about the person, past and present, favorable and
unfavorable, should be considered in making a meaningful decision. Specifically these are: (1) the
nature and seriousness of the conduct and surrounding circumstances; (2) the frequency and recency
of the conduct; (3) the age of the applicant; (4) the motivation of the applicant, and the extent to
which the conduct was negligent, willful, voluntary, or undertaken with knowledge of the
consequences; (5) the absence or presence of rehabilitation; and (6) the probability that the
circumstances or conduct will continue or recur in the future.
The following adjudicative guidelines are raised:
Guideline F - Financial Considerations: Failure or inability to live within one’s
means, satisfy debts, and meet financial obligations may indicate poor self-control,
lack of judgment, or unwillingness to abide by rules and regulations, all of which can
raise questions about an individual’s reliability, trustworthiness and ability to protect
classified information.
Guideline E - Personal Conduct: Conduct involving questionable judgment, lack of
candor, dishonesty, or unwillingness to comply with rules and regulations can raise
questions about an individual’s reliability, trustworthiness and ability to protect
classified information.
Conditions pertaining to these adjudicative guidelines that could raise a security concern and may
be disqualifying, as well as those which could mitigate security concerns, are set forth and discussed
in the conclusions below.
Since the protection of national security is the paramount consideration, the final decision
in each case must be reached by applying the standard that the issuance of the clearance is “clearly
consistent with the national interest.”   In reaching this decision, I have drawn only those20
conclusions that are based on the evidence contained in the record.
The Government is responsible for presenting evidence to establish facts in the SOR that
have been controverted. The applicant is responsible for presenting evidence to rebut, explain,
extenuate, or mitigate facts admitted by the applicant or proven by the Government, and has the
ultimate burden of persuasion as to obtaining a favorable security decision.
6
CONCLUSIONS
Financial Considerations
Applicant’s recurrent financial difficulties which contributed to the filing of two bankruptcies
between 2001 and 2004, trigger the application of Financial Considerations Disqualifying Condition
(FC DC) a (inability or unwillingness to satisfy debts), FC DC c (a history of not meeting financial
obligations), and FC DC e (consistent spending beyond one’s means, which may be indicated by
excessive indebtedness, significant negative cash flow, high debt-to-income ratio and other financial
analysis).
The recurrent nature of the financial problems eliminates Financial Consideration Mitigating
Condition (FC MC) a (the behavior happened so long ago, was so infrequent, or occurred under
such circumstances that it is unlikely to recur) from consideration. FC MC b (the conditions that
resulted in the financial problem were largely beyond the person’s control (e.g., loss of employment,
a business downturn, unexpected medical emergency, or a death, divorce or separation), and the
individual acted responsibly under the circumstances) is also inapplicable. Specifically, the first
prong of FC MC b applies, but not the second prong. The financial problems that led to the filing
of the 2001 bankruptcy primarily were caused when Applicant quit her full-time job, and took a
lesser-paying, part-time job, to enable her to spend more time caring for her seriously ill mother, and
they recurred shortly thereafter, when an on-the-job injury disabled her husband from working full
time for approximately three years. Conversely, Applicant and her husband used part of his 2003
worker’s compensation settlement to buy a recreational vehicle and an automobile, rather than to
satisfy outstanding debts.
Applicant has been paying her creditors through a bankruptcy trustee for the past 18 months
without interruption. Her salary has nearly doubled since 2004, and she has approximately $232 of
income remaining after all monthly expenses have been paid. FC MC c (there are clear indications
that the problem is being resolved or is under control), and FC MC d (the individual initiated a
good-faith effort to repay overdue creditors or otherwise resolve debts) apply. 
Personal Conduct
Applicant’s responses to Questions 33, 38, and 39 of her 2005 SF 86 raise the issue of
whether Personal Conduct Disqualifying Condition a (deliberate omission, concealment, or
falsification of relevant facts from any personnel security questionnaire, personal history statement,
or similar form used to conduct investigations, determine employment qualifications, award benefits
or status, determine security clearance eligibility or trustworthiness, or award fiduciary
responsibilities) applies. Applicant completed her first SF 86 in February 2004. The Chapter 13
bankruptcy occurred in 2005, 16 months later. When the FSO gave her a copy of the 2004 SF 86,
he simply asked her to re-sign it, and return it, not update it. The omission of the Chapter 13
bankruptcy was not intentional.
The debts listed in subparagraphs 1.a. and 1.b. were included in the Chapter 13 bankruptcy.
No evidence indicates that the debts were either 90 days overdue, or had ever been 180 days overdue
at the time she initially completed the SOR in 2004. Subparagraph 1.c. was discharged in the Chapter
7 bankruptcy in 2001. PC DC a does not apply. 
Directive ¶E2.2.1.6.21
Directive ¶E2.2.1.8.22
7
There are no personal conduct security concerns.
Whole Person Concept
Applicant’s recurrent financial difficulties that precipitated the filing of a second bankruptcy
in 2005 generate a security concern. These adverse facts are outweighed by the length of time she
has earned enough income to comfortably satisfy her monthly expenses, and the extensive period of
time she has been in compliance with the Chapter 13 bankruptcy plan. Evaluating these facts in the
context of the whole person concept, particularly the presence of rehabilitation,  and the minimal21
potential for coercion,  I conclude she has mitigated the security concern.22
FORMAL FINDINGS
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
Paragraph 2 - Guideline E: FOR APPLICANT
Subparagraph 1.a.: For Applicant
Subparagraph 1.b.: For Applicant
Subparagraph 1.c.: For Applicant
DECISION
8
In light of all the circumstances presented by the record in this case, it is clearly consistent
with the national interest to grant or continue a security clearance for Applicant. Clearance is
granted.
Marc E. Curry
Administrative Judge