DATE:  November 27, 2007
In re:
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SSN: ----------
Applicant for Security Clearance
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ISCR Case No. 06-26733
DECISION OF ADMINISTRATIVE JUDGE
MARY E. HENRY
APPEARANCES
FOR GOVERNMENT
James F. Duffy, Esq., Department Counsel
FOR APPLICANT
Pro Se
SYNOPSIS
For the last 11 years, Applicant has had significant debt problems. Twice he has resolved his
old debts through bankruptcy. Since his last bankruptcy discharge 18 months ago, he has again
incurred significant unpaid debt. He has not mitigated the government’s concerns about his finances.
Clearance is denied.
STATEMENT OF THE CASE
Applicant’s response to the Motion to Amend the SOR, dated September 26, 2007; Tr. at 8-9.1
Applicant’s response to the SOR, dated May 23, 2007, at 1-2; Applicant’s supplemental response dated August2
17, 2007 at 1.
Response to Motion to Amend, supra note 1, at 1.3
Id.4
2
On April 27, 2007, the Defense Office of Hearings and Appeals (DOHA) issued a Statement
of Reasons (SOR) to Applicant, pursuant to Executive Order 10865, Safeguarding Classified
Information Within Industry, dated February 20, 1960, as amended and modified, and Department
of Defense Directive 5220.6, Defense Industrial Security Clearance Review Program (Directive),
dated January 2, 1992, as amended and modified. The SOR 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. Specifically, the SOR sets
forth security concerns arising under Guideline F (Financial Considerations) of the revised
Adjudicative Guidelines (AG) issued on December 29, 2005 and implemented by the Department
of Defense, effective September 1, 2006. DOHA recommended the case be referred to an
administrative judge to determine whether a clearance should be granted, continued, denied, or
revoked. On May 29, 2007, Applicant submitted a notarized response to the allegations. He
requested a hearing.  He submitted a second notarized response on August 17, 2007.
This matter was assigned to another administrative judge on September 19, 2007. DOHA
issued a notice of hearing on September 21, 2007. Due to a personal emergency, DOHA reassigned
this case to me on October 10, 2007. I held a hearing on October 16, 2007. The government
submitted government exhibits (GE), 1 through 7, which were marked and admitted into evidence.
Applicant did not submit any documents into evidence at the hearing, although he testified. The
hearing transcript (Tr.) was received on October 24, 2007. I held the record open until October 31,
2007 for the submission of additional evidence by Applicant. He timely submitted 10 documents,
which were marked and admitted into evidence as Applicant Exhibits (AE) A through J.
PROCEDURAL ISSUES
The government filed a Motion to Amend the SOR on September 13, 2007 to include
additional allegations (1.g through 1.m) under Guideline F. Applicant responded to the allegations
in writing on September 26, 2007. He did not object to the government’s request to amend the SOR
in his response or at the hearing. I granted the motion and amended the SOR to include allegations
1.g through 1.m under Guideline F.1
FINDINGS OF FACT
Applicant admitted the allegations under Guideline F, subparagraphs 1.a through 1.i, 1.k and
1.m of the SOR.  Those admissions are incorporated as findings of fact. He denied the amount owed2
in allegation 1.j.  He denied the remaining allegations.  After a complete review of the evidence in3 4
the record and upon due consideration, I make the following findings of fact.
GE 1 (Applicant’s security clearance application, signed December 6, 2005) at 2, 7, 8, 14, 17; Tr. at 17-18.5
GE 2 (1997 bankruptcy court docket sheet); Tr. at 19-21, 44-45.6
GE 3 (2000 bankruptcy petition, court docket sheet, and court order); Tr. at 23-24, 27-28, 44-46.7
GE 4 (2003 bankruptcy petition, court docket sheet, and court order); AE I (Copy of banking statements for8
2003); Tr. at 28-30.
SOR; AE B(Information of rights to withdraw funds from 401K0: AE C(Unsigned 401K withdrawal form);9
AE F ( unpaid medical bill); AE G (Unpaid medical bill); AE H (forbearance documents); Tr. at 32–39.
3
Applicant, who is 44 years old, works as an associate designer for a Department of Defense
contractor and has since May 2004. He is married and has two children, a son age 17 and a daughter
age 12. He received an associate of arts degree in computer electronics. He completed his security
clearance application (SF-86) on December 6, 2005.5
After the birth of his daughter in 1995, Applicant’s wife did not return to work. The loss of
her income caused a strain on their finances. On the advice of a friend, he and his wife decided to
file for Chapter 13 bankruptcy in 1997. Shortly after filing, they concluded that they made a bad
decision and decided not to proceed with the bankruptcy. The court closed its case on July 15, 1997.
They worked out their debt issues with their creditors. They paid most of their debts. They
voluntarily returned one car. He acknowledged at the hearing that a balance remained after the sale
of the car.6
In May 1999, Applicant sustained an on-the-job injury. He did not return to work until
September 1999. Although he received worker’s compensation benefits until September 1999, he
again encountered financial difficulties. By early 2000, his financial situation forced him to file for
Chapter 7 bankruptcy.  In an Order dated October 12, 2000, the court discharged his debts of
$27,000, including the remaining deficiency on the car he voluntarily returned to the dealer.7
Between January and June 2003, Applicant experienced problems with delayed electronic
deposit of his paycheck by his employer, causing his automatic check payments to be returned, which
caused several hundred dollars in bank fees. In July 2003, Applicant and his wife filed for Chapter
13 bankruptcy protection. For the next three years under the auspices of the bankruptcy trustee, they
paid their debts through monthly payments, which ultimately totaled $24,000. The court entered a
discharge order on May 16, 2006 and closed its file on July 24, 2006.8
Since his last bankruptcy discharge, Applicant has incurred more unpaid debt. Most
importantly, he is behind in his payments on his mortgage and his second mortgage. His is one
month behind in his car payment. His total debt on these bills is approximately $5,700. In addition,
he owes several smaller bills totaling approximately $300. The primary mortgage holder on his
property agreed to a forbearance plan, which required Applicant to pay $1200 by the end of August
2007 and an additional $460 a month for six months. Applicant has not provided any documentation
which reflects that he has made these payments. Applicant provided information on obtaining a
hardship withdrawal from his 401K plan as he intends to use these funds to repay his outstanding
second mortgage debt. He intended to repay the remaining overdue car loan balance of $380 at the
end of October, but has not provided proof of the payment.9
These income estimates are based on Applicant’s leave and earnings statements from April 2007 through10
October 15, 2007, and his wife’s leave and earnings statements from May 2007 through September 30, 2007. AE D
(Applicant’s earnings statement); AE E (Wife’s earnings statement); AE J (monthly budget).
Tr. at 40, 50-51.11
Directive, revised Adjudicative Guidelines (AG) ¶ 2(a)(1)-(9).12
ISCR Case No. 96-0277 at 2 (App. Bd., July 11, 1997).13
ISCR Case No. 97-0016 at 3 (App. Bd., Dec. 31, 1997); Directive, Enclosure 3, ¶ E3.1.14.14
Department of the Navy v. Egan, 484 U.S. 518, 528 (1988). 15
4
Applicant earns $2,575 a month in base pay plus overtime. His net pay for the last six months
(13 pay checks) averaged $2,924. His wife works for a school system. As a result her monthly
income decreases significantly in the summer months. Her average monthly income from May 2007
through September 30, 2007 was $576. During the school year, his wife’s monthly income increases
approximately $450. Their monthly expenses total approximately $3,950. With his overtime and
when his wife receives her full pay, their monthly income averages approximately $4,000.10
Applicant’s wife is looking for a better paying position. He is also considering selling his
house or refinancing his mortgage to reduce monthly living expenses.11
POLICIES
The revised Adjudicative Guidelines set forth disqualifying conditions (DC) and mitigating
conditions (MC) applicable to each specific guideline. An administrative judge need not view the
revised adjudicative guidelines as inflexible ironclad rules of law. Instead, acknowledging the
complexities of human behavior, these guidelines are intended to assist the administrative judge in
reaching fair and impartial common sense decisions. Although the presence or absence of a particular
condition or factor for or against clearance is not outcome determinative, the revised AG should be
followed whenever a case can be measured against this policy guidance. In addition, each security
clearance decision must be based on the relevant and material facts and circumstances, the whole-
person concept, and the factors listed in the Directive. Specifically, these are: (1) the nature, extent,
and seriousness of the conduct; (2) the circumstances surrounding the conduct; (3) the frequency and
recency of the conduct; (4) the individual’s age and maturity at the time of the conduct; (5) the
voluntariness of participation; (6) the presence or absence of rehabilitation and other behavioral
changes; (7) the motivation for the conduct; (8) the potential for pressure, coercion, exploitation, or
duress; and (9) the likelihood of continuation or recurrence.12
The sole purpose of a security clearance determination is to decide if it is clearly consistent
with the national interest to grant or continue a security clearance for an applicant.  The government13
has the burden of proving controverted facts.  The burden of proof is something less than a14
preponderance of the evidence.  Once the government has met its burden, the burden shifts to the15
applicant to present evidence of refutation, extenuation, or mitigation to overcome the case against
ISCR Case No. 94-1075 at 3-4 (App. Bd., Aug. 10, 1995); Directive, Enclosure 3, ¶ E3.1.15.16
ISCR Case No. 93-1390 at 7-8 (App. Bd. Decision and Reversal Order, Jan. 27, 1995); Directive, Enclosure17
3, ¶ E3.1.15.
Egan, 484 U.S. at 531.18
Id.19
Id.; Directive, revised AG ¶ 2(b).20
Executive Order No. 10865 § 7.21
5
him.  Additionally, an applicant has the ultimate burden of persuasion to obtain a favorable16
clearance decision.17
No one has a right to a security clearance,  and “the clearly consistent standard indicates that18
security clearance determinations should err, if they must, on the side of denials.”  Any reasonable19
doubt about whether an applicant should be allowed access to sensitive information must be resolved
in favor of protecting such sensitive information.  Section 7 of Executive Order 10865 specifically20
provides industrial security clearance decisions shall be “in terms of the national interest and shall
in no sense be a determination as to the loyalty of the applicant concerned.” The decision to deny an
individual a security clearance is not necessarily a determination as to the allegiance, loyalty, and
patriotism of an applicant.  It is merely an indication that the applicant has not met the strict21
guidelines the President and the Secretary of Defense have established for issuing a clearance.
CONCLUSIONS
Upon consideration of all the facts in evidence, and after application of all appropriate
adjudicative factors, I conclude the following with respect to the allegations set forth in the SOR:
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 individuals’s reliability, trustworthiness and ability to
protect classified information. An individual who is financially overextended is at risk of having to
engage in illegal acts to generate funds. (AG ¶ 18.) Applicant has new, significant unpaid debt, and
a history of debt problems for the last eleven years. DC ¶ 19 (a) inability … to satisfy debts and DC
¶ 19 (c) a history of not meeting financial obligations apply.
I have carefully reviewed the mitigating conditions under this guideline. MC ¶ 26 (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 and MC ¶ 20 (d) the
individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts may
have some applicability in this case. Applicant’s on-the-job injury in 1999 placed a financial
6
hardship on the family. Because his finances became unmanageable, he and his wife filed for
bankruptcy in 2000. The court discharged all their debts, giving them a chance to start over. Within
three years, they again had financial problems which necessitated a Chapter 13 bankruptcy filing.
To their credit, they complied with the repayment plan developed. After three years of payments, the
court entered a discharge order in May 2006. Just over a year after the completion of the latest
bankruptcy repayment plan, Applicant again has unpaid bills. Although he encountered difficulties
with timely electronic payment of his pay in 2003, this factor alone does not account for all his
financial problems, particularly his most recent debts. He has not provided any reason for his current
financial problems, except to state that his wife’s income decreased during the summer months, a
factor he knows will occur and for which they should plan, but don’t.
Applicant contacted his primary mortgagor and made arrangements to repay his overdue
mortgage debt of nearly $4,000. He also plans to use money from his 401K to repay the monies
owing on his second mortgage. The arrangements and plans are a step in the right direction. He is
also working on bringing his car payments current. He, however, has not provided proof that he has
actually made any of these payments. Thus, his is entitled to only partial credit for good faith efforts
to resolve his largest debts.
Whole Person Analysis
Protection of our national security is of paramount concern. Security clearance decisions are
not intended to assign guilt or to impose further punishment for past transgressions. Rather, the
objective of the adjudicative process is the fair-minded, commonsense assessment of a person’s
trustworthiness and fitness for access to classified information. Thus, in reaching this decision, I
have considered the whole person concept in evaluating Appellant’s risk and vulnerability in
protecting our national interests. 
Applicant and his wife have encountered financial difficulties for the last 11 years. Twice
they have filed for bankruptcy and eliminated their debt through this legal process, one time after
making the required monthly payments for three years. Unfortunately, they have not learned how to
manage their finances from this process and are again in debt, primarily as a result of financial
mismanagement. Considering his age, circumstances beyond his control in the past, the
circumstances surrounding his financial problems and his potential for rehabilitation, I find that
Applicant has not mitigated the government’s security concerns. Accordingly, I find against
Applicant under Guideline F.
FORMAL FINDINGS
Formal findings For or Against Applicant on the allegations set forth in the SOR, as required
by Section E3.1.25 of Enclosure 3 of the Directive, are:
SOR ¶ 1-Guideline F : AGAINST APPLICANT
Subparagraphs a-m: Against Applicant
7
DECISION
In light of all of the circumstances presented by the record in this case, it is not clearly
consistent with the national interest to grant a security clearance for Applicant. Clearance is denied.
Mary E. Henry
Administrative Judge