KEYWORD: Financial
DIGEST: Applicant admits owing more than $13,000 on seven delinquent accounts.  He has shown
payment of $327.  The record evidence is insufficient to mitigate or extenuate the negative security
implications stemming from Applicant’s unpaid debts. Clearance is denied.
CASENO: 06-25847.h1
DATE: 07/23/2007
DATE:  July 23, 2007
In re:
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SSN: ------------
Applicant for Security Clearance
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ISCR Case No. 06-25847
DECISION OF ADMINISTRATIVE JUDGE
CLAUDE R. HEINY
APPEARANCES
FOR GOVERNMENT
Robert E. Coacher, Esq., Department Counsel
FOR APPLICANT
Pro Se
SYNOPSIS
Applicant admits owing more than $13,000 on seven delinquent accounts.  He has shown
payment of $327.  The record evidence is insufficient to mitigate or extenuate the negative security
implications stemming from Applicant’s unpaid debts. Clearance is denied.
Required by Executive Order 10865, as amended, and Department of Defense Directive 5220.6 (Directive),1
dated January 2, 1992, as amended.
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STATEMENT OF THE CASE
On March 30, 2007, the Defense Office of Hearings and Appeals (DOHA) issued a
Statement of Reasons (SOR) to Applicant stating that DOHA could not make the preliminary
affirmative finding  it is clearly consistent with the national interest to grant or continue a security1
clearance for Applicant, due to Financial Considerations security concerns. On May 4, 2007,
Applicant answered the SOR and requested a decision without a hearing. On July 16, 2007, I was
assigned the case. 
FINDINGS OF FACT
The SOR alleges security concern for Financial Considerations. Applicant admits owing the
IRS $4,542 and alleges he has entered into a repayment plan whereby he pays $250 per month.  He
admits owing six other debts and alleges he has entered into a repayment arrangement.  He asserts
he is making payments on department store account. Applicant asserts the debt of $4,511 listed in
SOR 1.d and the $4,511 debt listed in SOR 1.f. are the same debt. The admissions are incorporated
herein as findings of fact. After a thorough review of the record, I make the following findings of
fact.
Applicant is a 61-year-old designer who has worked for a defense contractor since January
2004, and is seeking to obtain a security clearance. Applicant is regarded by his supervisor, co-
workers, and those who know him as responsible, works well with others, has a warm and bright
personality, and is a very valued employee. He sets examples for others to follow. He was
congratulated on the team effort to complete a phase of work. (Applicant’s response to FORM)
Applicant owed the IRS $4,552 for delinquent federal taxes for tax years 2000 and 2002.
(SOR 1.a)  As of February 2007, Applicant owed $4,542. From the IRS statement (Item 5) it is
unclear if the $2,811reported as penalties and interest is in addition to or included in the current
balance listed at $4,542.
In January 2007, Applicant completed interrogatories about his debts. (Item 5) Applicant
owed $1,386 on a charged off credit card account (SOR 1.b), $671 on a charged off department store
account (SOR 1.c), $4,511 on a charged off store account (SOR 1.d), $824 on a charged off store
account (SOR 1. e), $4,511 to a collection agency (SOR 1.f), $663 on a charged off department store
account (SOR 1. g), and $1,421 on a charged off credit card account (SOR 1.h).  As of mid- May
2007, the $663 department store charged off account had been reduced to $336, after he made a
$100 payment on the account in early May 2007. 
In February 2007, Applicant completed a monthly financial statement which showed his net
remainder was a negative $229 per month. (Item 5)  As of February 2007, Applicant's gross pay,
with over time, was $3,199 per two weeks and his net pay was $1,919. (Item 5) 
In January 2007, Applicant contacted a law firm to resolve his financial problems. (Item 3)
The agreement required Applicant to pay the law firm $515 each month.  The law firm sent letters
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to ten collection agencies stating the Applicant was disputing the debt and requested verification of
the debt. (Item 5)  Applicant's March 2007-credit report (Item 6) lists two account numbers for SOR
debts listed as SOR 1.b and SOR 1.d, which have similar account numbers to the accounts on two
of the letters sent by the law firm. 
There is no evidence showing which debts are included in the repayment agreement.  There
is no evidence Applicant has made any payments to the law firm.  There is no evidence the law firm
has ever made payment to a creditor. The lack of payment documentation was set forth in the
FORM.  Applicant failed to show any documented payment in his response to the FORM. 
From May 1983 until February 2002, Applicant was a senior analyst for a power and light
company. (Item 4) Applicant asserts his financial troubles began when he was placed in early
retirement at age 55 and attempted a small business venture, a convenience store.  The store operated
from August 2002 until July 2003. (Item 4) A highway bypass caused a reduction in patrons and
Applicant sold the store for “what I had invested and broke about even at that point.” (Applicant’s
response to FORM)  Applicant was unemployed from July 2003 to January 2004.  He obtained his
current job in January 2004. 
POLICIES
The Directive sets forth adjudicative guidelines to be considered when evaluating a person’s
eligibility to hold a security clearance. Disqualifying Conditions (DC) and Mitigating Conditions
(MC) are set forth for each applicable guideline. Additionally, each decision must be a fair and
impartial commonsense decision based upon the relevant and material facts and circumstances, the
whole person concept, and the factors listed in Section 6.3 of the Directive. The adjudicative
guidelines are to be applied by administrative judges on a case-by-case basis with an eye toward
making determinations that are clearly consistent with the interests of national security. The
presence or absence of a particular condition or factor for or against clearance is not determinative
of a conclusion for or against an applicant.  However, the adjudicative guidelines should be followed
whenever a case can be measured against this policy guidance. Considering the evidence as a whole,
I conclude the relevant guideline to be applied here is Guideline F, Financial Considerations.
BURDEN OF PROOF
The sole purpose of a security clearance decision is to decide if it is clearly consistent with
the national interest to grant or continue a security clearance for an applicant. Initially, the
Government must establish, by substantial evidence, that conditions exist in the personal or
professional history of the applicant which disqualify, or may disqualify, an applicant from being
eligible for access to classified information. The burden of proof in a security clearance case is
something less than a preponderance of evidence, although the government is required to present
substantial evidence to meet its burden of proof.  Substantial evidence is more than a scintilla, but
less than a preponderance of the evidence. All that is required is proof of facts and circumstances
which indicate an applicant is at risk for mishandling classified information, or that an applicant
does not demonstrate the high degree of judgment, reliability, or trustworthiness required of persons
handling classified information.  Additionally, the government must prove controverted facts alleged
in the SOR.  Once the government has met its burden, the burden shifts to an applicant to present
 ISCR Case No. 93-1390 (January 27, 1995) at pp. 7-8; Directive, Enclosure 3, Item E3.1.152
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evidence to refute, extenuate or mitigate the government's case.  Additionally, an applicant has the
ultimate burden of persuasion to obtain a favorable clearance decision.2
As noted by the United States Supreme Court in Department of Navy v. Egan, 484 U.S. 518,
528 (1988), “no one has a ‘right’ to a security clearance.” A person who has access to classified
information enters into a fiduciary relationship with the government based on trust and confidence.
The government, therefore, has a compelling interest in ensuring each applicant possesses the
requisite judgment, reliability and trustworthiness of one who will protect the national interests. The
“clearly consistent with the national interest” standard compels resolution of any reasonable doubt
about an applicant’s suitability for access to classified information in favor of protecting national
security.  Security clearance determinations should err, if they must, on the side of denials. 
CONCLUSIONS
The Government has satisfied its initial burden of proof under Guideline F, financial
considerations. A person’s relationship with his creditors is a private matter until evidence is
uncovered demonstrating an inability or unwillingness to repay debts under agreed upon terms.
Absent evidence of strong extenuating or mitigating circumstances, an applicant with a history of
serious or recurring financial difficulties is in a position of risk that is inconsistent with the holding
of a security clearance. An applicant is not required to be debt free, but is required to manage his
finances so as to meet his financial obligations.
Financial considerations become a security concern when a person has significant delinquent
debts. An individual who is financially overextended is at risk of having to engage in illegal or
unethical acts to generate funds to meet financial obligations. Additionally, an individual who is
financially irresponsible may also be irresponsible, unconcerned, or careless in their obligations to
protect classified information.  Behaving responsibly or irresponsibly in one aspect of life provides
an indication of how a person may behave in other aspects of life. 
The Applicant admits owing seven delinquent debts totaling $13,691. Disqualifying
Conditions (DC) 19 a, “inability or unwillingness to satisfy debts” and 19 c, “a history of not
meeting financial obligations” apply. 
In January 2007, Applicant was asked about his past due debts. Since that time, he has
documented payment showing he reduced one department store debt (SOR 1.g) from $663 to $336.
There is no evidence of any additional payments.  Applicant asserts the $4,511 debt listed in SOR
1.d is the same $4,511 debt listed in SOR 1.f, and I find these to be the same debt. 
Applicant entered into an agreement with a law firm whereby he was to pay $515 each
month.  There is no evidence he has made any payments in compliance with the agreement.  The
FORM pointed out a lack of documented payment in compliance with the agreement.  Applicant’s
answer to the FORM failed to provide any payment documentation. Entering into an initial
agreement establishes nothing.  Applicants often make one, two, or three payments before they stop
sending money in compliance with the repayment agreement. Frequently, no payments are ever
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made after an applicant initially talks with the financial consulting firm. There is no evidence of
payment.
The law firm sent letters to ten creditors stating the Applicant disputed the debts and asking
for verification of the debts. This is immaterial since Applicant admitted he owes all of the debts.
Mitigating Condition (MC) 20 e, ”the individual has a reasonable basis to dispute the legitimacy of
the past-due debt which is the cause of the problem and provides documented proof to substantiate
the basis of the dispute or provides evidence of actions to resolve the issue” does not apply.  There
is no showing which debts were included in the repayment agreement.  Debts are often transferred
from one collection agency to another.  In viewing Applicant’s March 2007-credit report (Item 6)
and the account numbers listed in the law firm’s letters to the creditors only two account numbers
(SOR 1.b and SOR 1.d) are similar. 
The burden is on Applicant to show which debts are in the repayment agreement.  This he
has failed to do.  For Mitigating Condition (MC) 20 d, “the individual initiated a good-faith effort
to repay overdue creditors or otherwise resolve debts” to apply there must be an “ability” to repay
the debts, the “desire” to repay, and evidence of a good-faith effort to repay.  A systematic, concrete
method of handling his debts is needed, which is not present here. Applicant’s February 2007
monthly financial statement (item 5) shows a negative net monthly remainder of $229.  He does not
have the ability to repay.  There is no showing of any payment to a creditor in compliance with a
repayment schedule.  Applicant asserts he is paying the IRS $250 per month, but has failed to
document payment.  MC 20 d does not apply.
None of the other mitigating conditions apply. Since the debts are yet owed, the behavior is
recent, there are seven debts so the behavior is not infrequent, and did not occur under circumstances
that it is unlikely to recur. MC 20 a, “the behavior happened so long ago, was so infrequent, or
occurred under such circumstances that it is unlikely to recur and does not cast doubt on the
individual’s current reliability, trustworthiness, or good judgment” does not apply. 
Applicant was the owner of a convenience store which he operated for about a year.  He sold
it and broke even.  He was unemployed for six months from July 2003 until January 2004. These
are factors beyond his control. But he has been employed for three and a half years and the only
documented payment is the $327 made on a department store account. I find MC 20 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” does not excuse
Applicant’s lack of payment.
There is no evidence Applicant has received financial counseling or that the problem is being
resolved or is under control.  Seeking the assistance of a law firm to resolve his debts is not the same
as receiving counseling. MC 20 c, “the person has received or is receiving counseling for the
problem and there are clear indications that the problem is being resolved or is under control” does
not apply.  Affluence was not at issue, therefore MC 20 f, “the affluence resulted from a legal source
of income” does not apply. 
In reaching my conclusions I have also considered: the nature, extent, and seriousness of the
conduct; Applicant’s age and maturity at the time of the conduct; the circumstances surrounding the
conduct; Applicant’s voluntary and knowledgeable participation; the motivation for the conduct; the
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frequency and recency of the conduct; presence or absence of rehabilitation; potential for pressure,
coercion, exploitation, or duress; and the probability that the circumstance or conduct will continue
or recur in the future. 
Applicant asserts he is addressing his past due debts.  He has shown payment of only $327
on his delinquent debts. A clearance at this time is not warranted. This decision should not be
construed as a determination that Applicant can not or will not attain the state of reform and
rehabilitation necessary to justify the award of a security clearance. The awarding of a security
clearance is not a once in a life time occurrence, but is based on applying the factors, both
disqualifying and mitigating, to the evidence presented. Should the Applicant be afforded an
opportunity to reapply for a security clearance in the future, having paid his debts or established
compliance with a repayment plan, he may well demonstrate persuasive evidence of his security
worthiness.  However, because the disqualifying conditions apply and no mitigating conditions
apply, I find against Applicant as to Financial Considerations security concerns. 
FORMAL FINDINGS
Formal Findings as required by Section 3, Paragraph 7, of Enclosure 1 of the Directive are
hereby rendered as follows:
Paragraph 1 Financial Considerations: AGAINST APPLICANT
Subparagraph 1.a: Against Applicant
Subparagraph 1.b: Against Applicant
Subparagraph 1.c: Against Applicant
Subparagraph 1.d: Against Applicant
Subparagraph 1.e: Against Applicant
Subparagraph 1.f: Same debt as 1.d. 
Subparagraph 1.g: Against Applicant
Subparagraph 1.h: Against 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.
Clearance is denied.
_____________________________
Claude R. Heiny 
Administrative Judge