KEYWORD: Financial 
DIGEST: Applicant has a history of financial problems. He made a good-faith effort to resolve his
financial problems by refinancing his home and paying or settling about $30,000 in debt. He
presented sufficient information to explain, extenuate, or mitigate the security concern. Eligibility
for a security clearance is granted. 
CASENO: 07-02503.h1
DATE: 08/30/2007
DATE:  August 30, 2007
In re:
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SSN: -----------
Applicant for Security Clearance
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ISCR Case No. 07-02503
DECISION OF ADMINISTRATIVE JUDGE
MICHAEL H. LEONARD
APPEARANCES
FOR GOVERNMENT
John Bayard Glendon, Esq., Department Counsel
FOR APPLICANT
Pro Se
SYNOPSIS
 Executive Order 10865, dated February 20, 1960, as amended, and DoD Directive 5220.6, dated January 2,1
1992, as amended (Directive).
 See Memorandum from the Under Secretary of Defense for Intelligence, dated August 30, 2006, Subject:2
Implementation of Adjudicative Guidelines for Determining Eligibility for Access to Classified Information (December
29, 2005). 
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Applicant has a history of financial problems. He made a good-faith effort to resolve his
financial problems by refinancing his home and paying or settling about $30,000 in debt. He
presented sufficient information to explain, extenuate, or mitigate the security concern. Eligibility
for a security clearance is granted. 
STATEMENT OF THE CASE
Applicant contests the Defense Department’s intent to deny or revoke his eligibility for a
security clearance. Acting under the relevant Executive Order and DoD Directive,  the Defense1
Office of Hearings and Appeals (DOHA) issued a statement of reasons (SOR) to Applicant on May
11, 2007. The SOR—which is equivalent to an administrative complaint—details the factual basis
for the action and alleges a security concern under Guideline F for financial considerations. The SOR
alleges eight delinquent accounts for about $33,000 in total. 
In addition to the Directive, this case is brought under the revised Adjudicative Guidelines
for Determining Eligibility for Access to Classified Information (Revised Guidelines) approved by
the President on December 29, 2005. The Revised Guidelines were then modified by the Defense
Department, effective September 1, 2006. They supersede or replace the guidelines published in
Enclosure 2 to the Directive. They apply to all adjudications and other determinations where an SOR
has been issued on September 1, 2006, or thereafter.  The Directive is pending revision or2
amendment. The Revised Guidelines apply here because the SOR is dated after the effective date.
On May 31, 2007, Applicant replied to the SOR and requested a hearing. The case was
assigned for hearing on June 27, 2007. The hearing took place as scheduled on August 8, 2007, and
the transcript was received on August 20, 2007.
The record was kept open to allow Applicant to submit additional documentary evidence. On
August 22 , Applicant made a timely submission and those matters (a fax cover sheet plus eightnd
one-page documents) were forwarded to me by department counsel who voiced no objections. The
matters are marked and admitted as Exhibit E.
FINDINGS OF FACT
Applicant admitted all indebtedness in his reply to the SOR. He indicated that he was in the
process of refinancing his home to obtain the necessary funds to resolve the debts and hoped to do
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so by June 30, 2007. In addition to his admissions and explanation, the following facts are
established. 
Applicant is a 56-year-old training analyst and property manager working for a contractor that
provides services to the U.S. Army. He has worked for his current employer since March 2004. He
has worked as a contractor for about the last 15 years. 
From 1968 to 1992, Applicant served on active duty in the Army working in signals
intelligence. He rose through the enlisted ranks to the rank of sergeant first class. He was then
advanced to the position of warrant officer for his last four years of service when he retired as a chief
warrant officer two. 
He has been married for nearly 36 years and has two adult children. His wife is not employed
outside the home. She suffers from bipolar disorder and depression and work became too much for
her. 
Applicant has held a security clearance for many years as a soldier and a civilian employee.
He is seeking to retain a security clearance for his current employment. 
Applicant has a history of financial problems. Indeed, a credit report from 2001 reflects seven
accounts in a collection or charged-off status (Exhibit 5). The SOR alleges that Applicant has eight
unpaid debts ranging from $40 to $14,143 for a total of approximately $33,000. The indebtedness
is based on collection accounts (two) and charged-off accounts (six). Seven of the eight debts appear
to have originated from credit card accounts. 
Applicant has paid in full or settled all the debts alleged in the SOR (Exhibits A, B, C, D, E,
and Applicant’s testimony). He was able to do so by refinancing his home in June 2007. His home
had a market value of about $220,000 and he owed about $87,000 (between a mortgage loan and a
line of credit). He refinanced for about $135,000, and he received about $36,000 after payment of
closing costs, fees, and one of the delinquent debts. His checking account statement reflects a deposit
of $35,828.81 on June 29, 2007 (Exhibit B at 1). Applicant then used the money to pay or settle the
other debts. 
In total, he spent approximately $30,000 to pay or settle the eight debts. As of August 3,
2007, his checking account had a balance of $8,850. His monthly mortgage payment is now about
$100 less than he was previously paying on the mortgage and line of credit. Based on his retirement
pay from the Army, and his current income and expenses, Applicant and his wife have a positive
monthly cash flow and they are living within their means. He has about $16,000 in a 401(k)
retirement account, which is the extent of his financial assets other than his home. 
Applicant attributes the debts to bad management by him and his wife. Also, he believes a
former son-in-law may have run up some of the credit card accounts, but does not have solid proof.
GENERAL PRINCIPLES OF LAW AND POLICIES
 Department of Navy v. Egan, 484 U.S. 518, 528 (1988) (“it should be obvious that no one has a ‘right’ to a3
security clearance”); Duane v. Department of Defense, 275 F.3d 988, 994 (10  Cir. 2002) (“It is likewise plain that thereth
is no ‘right’ to a security clearance, so that full-scale due process standards do not apply to cases such as Duane’s.”).
 Egan, 484 U.S. at 531.4
 Directive, ¶ 3.2. 5
 Directive, ¶ 3.2. 6
 ISCR Case No. 02-18663 (App. Bd. Mar. 23, 2004).7
 Directive, Enclosure 3, ¶ E3.1.14.8
 Directive, Enclosure 3, ¶ E3.1.15.9
 Directive, Enclosure 3, ¶ E3.1.15.10
 Egan, 484 U.S. at 531. 11
 ISCR Case No. 01-20700 (App. Bd. Dec. 19, 2002) (citations omitted).12
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No one has a right to a security clearance.  As noted by the Supreme Court in Department3
of Navy v. Egan, “the clearly consistent standard indicates that security clearance determinations
should err, if they must, on the side of denials.”  A favorable decision establishes eligibility of an4
applicant to be granted a security clearance for access to confidential, secret, or top-secret
information.  An unfavorable decision: (1) denies any application; (2)  revokes any existing security5
clearance; and (3) prevents access to classified information at any level and retention of any existing
security clearance.  Under Egan, Executive Order 10865, and the Directive, any doubt about whether6
an applicant should be allowed access to classified information will be resolved in favor of
protecting national security.
There is no presumption in favor of granting, renewing, or continuing eligibility for access
to classified information.  The government has the burden of presenting evidence to establish facts7
alleged in the SOR that have been controverted.  An applicant is responsible for presenting evidence8
to refute, explain, extenuate, or mitigate facts that have been admitted or proven.  In addition, an9
applicant has the ultimate burden of persuasion to obtain a favorable clearance decision.  In Egan,10
the Supreme Court said that the burden of proof is less than the preponderance of the evidence.  The11
agency appellate authority has followed the Court’s reasoning, and a judge’s findings of fact are
reviewed under the substantial-evidence standard.12
The Revised Guidelines set forth adjudicative guidelines to consider when evaluating a
person’s security clearance eligibility, including disqualifying conditions (DC) and mitigating
conditions (MC) for each guideline. In addition, each clearance decision must be a fair and impartial
commonsense decision based upon consideration of all the relevant and material information, the
pertinent criteria and adjudication factors, and the whole-person concept. A person granted access
to classified information enters into a special relationship with the government. The government
must be able to have a high degree of trust and confidence in those persons to whom it grants access
to classified information. The decision to deny a person a security clearance is not a determination
 Executive Order 10865, § 7.13
 Revised Guidelines at 13–14 (setting forth the disqualifying and mitigating conditions). 14
 DC 1 is “inability or unwillingness to satisfy debts.” 15
 DC 3 is “a history of not meeting financial obligations.” 16
 MC 4 is “the individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts.”17
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of an applicant’s loyalty.  Instead, it is a determination that the applicant has not met the strict13
guidelines the President has established for granting eligibility for a security clearance.
CONCLUSIONS
Under Guideline F for financial considerations,  a security concern typically exists due to14
significant unpaid debts. 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. 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. Similarly, an individual who is financially irresponsible may also be
irresponsible, unconcerned, negligent, or careless in properly handling and safeguarding classified
information.   
The record evidence supports a conclusion that Applicant has a history of financial problems.
His history of financial problems is a security concern because it indicates inability or unwillingness
to satisfy debts  and a history of not meeting financial obligations  within the meaning of Guideline15 16
F. The record evidence is more than sufficient to establish these two disqualifying conditions. 
Applicant receives credit in mitigation. The most pertinent mitigating condition is the fourth
MC  of Guideline F, because Applicant has made a good-faith effort to repay or settle the eight17
debts. His good-faith effort is established by his actions. In 2007, he refinanced his most valuable
asset and spent about $30,000 in home equity to pay or settle the debts. And unlike many applicants
in financial cases, Applicant has corroborated his testimony by providing documentary proof of
payment or settlement of the debts. He has cleaned up his financial house, has cash left over, and is
otherwise living within his means. Although he can be faulted for taking too long to address his
indebtedness, there are no concerns about his current financial situation. Indeed, the refinancing
actually lower his total monthly housing payment. Taken together, these circumstances are sufficient
to qualify for initiating a good-faith effort within the meaning of the guideline.
Based on the record evidence as a whole, Applicant presented sufficient evidence to explain,
extenuate, or mitigate the financial considerations security concern. Likewise, he has met his
ultimate burden of persuasion to obtain a favorable clearance decision.
FORMAL FINDINGS
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SOR ¶ 1–Guideline F: For Applicant
Subparagraphs a–h: For Applicant
DECISION
In light of all the circumstances, it is clearly consistent with the national interest to grant or
continue a security clearance for Applicant. Eligibility for a security clearance is granted. 
Michael H. Leonard
Administrative Judge