DEPARTMENT OF DEFENSE 
 DEFENSE OFFICE OF HEARINGS AND APPEALS 
  
  
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 08-03871 
  ) 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Robert Coacher, Esquire, Department Counsel 
For Applicant: Pro Se 
 
 
 
 
______________ 
 
Decision 
______________ 
 
 
HEINY, Claude R., Administrative Judge: 
 
Applicant had 27 past due or collection accounts that totaled $63,000. Half of the 
debt has been paid, is being paid, or are deferred student loans and the other half is 
part of a recently established repayment plan. Applicant has rebutted or mitigated the 
government’s security concerns under financial considerations. Clearance is granted. 
 
Statement of the Case 
 
 Applicant contests the Defense Department’s intent to deny or revoke his 
eligibility for an industrial security clearance. Acting under the relevant Executive Order 
and DoD Directive,1 the Defense Office of Hearings and Appeals (DOHA) issued a 
 
 
 
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1 Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 
1960), as amended; Department of Defense Directive 5220.6, Defense Industrial Personnel Security 
Clearance Review Program (January 2, 1992), as amended (Directive), and the revised adjudicative 
guidelines (AG) promulgated by the President on December 29, 2005, and effective within the 
Department of Defense for SORs issued after September 1, 2006. 
 
 
 
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Statement of Reasons (SOR) on September 24, 2008, detailing security concerns under 
financial considerations. 
  
 On November 4, 2008, Applicant answered the SOR, and requested a hearing. 
On February 4, 2009, I was assigned the case. On February 19, 2009, DOHA issued a 
notice of hearing scheduling the hearing which was held on March 17, 2009.  
 
 The government offered Exhibits (Ex.) 1 through 6, which were admitted into 
evidence. Applicant testified on his own behalf and submitted Exhibits A through E, 
which were admitted into evidence. The record was held open to allow additional 
information from Applicant. On April 1, 2009, additional material was submitted. 
Department Counsel had no objection to the material, which was admitted into the 
record as Ex. F. On March 31, 2009, the transcript (Tr.) was received. 
 
Findings of Fact 
 
 In his Answer to the SOR, Applicant denied the factual allegations in SOR ¶ 1.e, 
1.t, and 1.x of the SOR. He admitted the factual allegations of the remaining SOR 
allegations. His admissions are incorporated herein. 
 
 Applicant is a 36-year-old senior electrical installer who has worked for a defense 
contractor since February 1998, and is seeking to maintain a secret security clearance. 
(Tr. 58) Applicant’s co-workers, colleagues, supervisors, acquaintances, and friends 
state: Applicant is very knowledgeable, a tremendous asset to the program, voluntarily 
works whatever hours it takes to achieve the desired goal, is well respected, a person of 
great character and integrity, hardworking, and honest. (Tr. 71, Ex. D) For the review 
period ending on December 31, 2008, his work performance was rated as far exceeding 
expectations. 
 
 The SOR lists 27 past due or placed for collection accounts totaling 
approximately $63,000. Six of the debts have been listed twice. These duplicates are 
listed under different creditors or in different SOR paragraphs. In November 1997, 
Applicant was discharged from the Navy and in February 1998, started his current job. 
(Ex. F) In July 2002, Applicant’s 1998 Chevrolet truck was repossessed after its 
transmission failed and would have required $1,800 in repairs. (Tr. 73) This debt is 
listed twice in the SOR. The $8,726 debt (SOR ¶ 1.l) is a company owed by the 
company listed in SOR ¶ 1.x ($6,646). (Tr. 40-41, Ex. F) The $6,646 has been 
transferred to a collection agency included in a debt settlement program. (Tr. 43, Ex. B) 
In January 2003, a car was repossessed due to financial difficulties incurred when his 
son was born prematurely and experienced medical problems. His wife was unable to 
work for four months. (Tr. 74, Ex. F)  
 
 In April 1999, Applicant’s wife had kidney surgery. In November 2001, Applicant 
had ankle surgery. In March 2004, Applicant had back surgery and was on sick leave 
for six months. While on medical leave, he received 60% of his salary, which did not 
 
 
 
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cover the bills. (Tr. 75, 76) Two months later, in June 2004, his wife broke her ankle. 
(Tr. 75, Ex. F) 
 
 In 2006, Applicant’s electrical utility bill greatly increased to $650 to $700 
monthly. (Tr. 23, 64) As a result, in January 2007, Applicant sought the protection of a 
Chapter 13, wage earner’s plan bankruptcy. Applicant could not afford the $1,500 
monthly payment due to his $1,100 monthly mortgage, a $300 car payment, $355 
monthly truck payment, and utility bills. (Tr. 24) The bankruptcy was converted to a 
Chapter 7, which was later dismissed. (Ex. A) The bankruptcy lists $181,000 in assets 
and $230,000 in liabilities (Ex. 6) Between the time of the conversion to Chapter 7, both 
Applicant and his wife received raises at work. Additionally, his wife’s boss quit which 
resulted in his wife doing more overtime. (Tr. 25) With the additional income Applicant 
and his wife no longer qualified for the Chapter 7 bankruptcy. (Ex. A)  
 
 When the bankruptcy was dismissed the truck and car were repossessed and the 
home went to foreclosure. (Tr. 63) Following the resale of the home, the mortgage 
holder has not contacted Applicant. (Tr. 65) Following repossession, the truck sold for 
$20,000 and the car for $10,000 leaving a debt of $5,800. (Tr. 69) Applicant has been 
making $100 monthly payments to the credit union on this obligation. Applicant intends 
to include this debt in the debt payment arrangement. (Ex. B)  
 
 In March 2009, six months after receiving the SOR and a month after receiving 
the Notice of Hearing, Applicant sought the assistance of a financial company. The plan 
addresses a total debt of $33,894 and requires paying $510 for 43 months and paying a 
$1,694 retainer fee by three installments of $495 each. (Tr. 27, Ex. B) Following the 
hearing, on March 31, 2009, the first payment ($495) of the retainer fee was made to 
the financial company. (Ex. F) Once sufficient funds were accumulated, the finance 
company will attempt to negotiate a settlement with Applicant’s creditors. (Tr. 34)  
 
Accounts included in the debt settlement program include the following debts: the 
$697 medical debt (SOR ¶ 1.b and 1.g); $427 (SOR ¶ 1.j); the $714 telephone bill (SOR 
¶ 1.m); $689 (SOR ¶ 1.z); $591 (SOR ¶ 1.aa); $8,726 (SOR ¶ 1.l); $5,549 (SOR ¶ 1.y), 
which Applicant asserts was his wife’s debt prior to their marriage; the $8,373 Ford 
repossession debt (SOR ¶ 1.o); $5,400 (SOR ¶ 1.f); and the $2,380 debt (SOR ¶ 1.u) is 
listed although it is being collected by a different collection agency. (Ex. B, F)  
 
 In October 2008, the $1,455 debt (SOR ¶ 1.e) was paid. (Ex. B) This debt is the 
same obligation as the debt listed in SOR ¶ 1.n. ($1,505). (Tr. 40) The original debt 
listed on Applicant’s credit bureau reports (CBRs) (Ex. 2, 3, 4) is a collection agency 
debt (SOR ¶ 1.5) and lists the same debtor listed in SOR ¶ 1.e. Additionally, schedule F 
of the bankruptcy indicates the $1,505 creditor (SOR ¶ 1.n) is the same debt collected 
by the collection agency. (Ex. B) In September and November 2008, the $432 debt 
(SOR ¶ 1.d, also listed in 1.h) was paid. (Ex. B) On February 1, 2009, the U.S. 
Treasury, through the Department of Navy, offset a $360 military credit card (SOR ¶ 1.t) 
which reduced the balance to zero. (Ex. B) In March 2009, the $177 insurance bill (SOR 
¶ 1.i) and the $151 YMCA debt (SOR ¶ 1.c) were paid. (Ex. F) 
 
 
 
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 Applicant’s wife obtained five student loans which represent seven of the SOR 
debts. Those accounts were: $2,133 (SOR ¶ 1.k); $4,000 (SOR ¶ 1.p, which is the 
same debt as SOR ¶ 1.r); $3,500 (SOR ¶ 1.q, which is the same debt as SOR ¶ 1.s); 
$2,057 (SOR ¶ 1.v); and $1,313 (SOR ¶ 1.w). The student loans, which total 
approximately $15,000, are being deferred. (Ex. E, F) Applicant is repaying a loan from 
his 401(k) retirement plan at a rate of $100 per month. He owes approximately $4,600 
on the loan. (Tr. 47)  
 
 In July 2008, Applicant answered written interrogatories (Ex. 5) and indicated he 
had made a payment arrangement with three of the creditors (SOR ¶ 1.f, $5,852, which 
by March 2009, had been reduced by $400; SOR ¶ 1.e; SOR ¶ 1.n, which was paid off 
in October 2008; and another creditor which was paid off before the SOR was issued.)  
 
 Applicant pays $343 per month on a 2001 truck. (Tr. 50) He also has a 1997 car 
which is paid for. (Tr. 77) Applicant and his wife purchased a mobile home and five 
acres for $77,000. Because of their poor credit, the loan company would not transfer the 
title to Applicant and his wife. (Tr. 48) Applicant pays $688 per month on a two year 
lease on the property. (Tr. 49) The mobile home needed extensive repairs to the 
bathroom. In December 2008, Applicant was unable to make payments on some of his 
debt due to making the bathroom repairs. (Tr. 52)  
 
 Applicant receives $125 monthly in VA disability. (Tr. 54) Applicant’s wife is a 
corporate trainer. (Tr. 59) She has been with the company since 2005 and makes 
$29,000 a year. (Tr. 60)  
 
Policies 
 
 When evaluating an Applicant’s suitability for a security clearance, the 
administrative judge must consider the revised adjudicative guidelines (AG). In addition 
to brief introductory explanations for each guideline, the adjudicative guidelines list 
potentially disqualifying conditions and mitigating conditions, which are useful in 
evaluating an Applicant’s eligibility for access to classified information. 
 
These guidelines are not inflexible rules of law. Instead, recognizing the 
complexities of human behavior, these guidelines are applied in conjunction with the 
factors listed in the adjudicative process. The administrative judge’s over-arching 
adjudicative goal is a fair, impartial and common sense decision. According to AG ¶ 
2(c), the entire process is a conscientious scrutiny of a number of variables known as 
the “whole person concept.” The administrative judge must consider all available, 
reliable information about the person, past and present, favorable and unfavorable, in 
making a decision. 
 
The protection of the national security is the paramount consideration. AG ¶ 2(b) 
requires that “[a]ny doubt concerning personnel being considered for access to 
classified information will be resolved in favor of national security.” In reaching this 
 
 
 
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decision, I have drawn only those conclusions that are reasonable, logical and based on 
the evidence contained in the record. Likewise, I have avoided drawing inferences 
grounded on mere speculation or conjecture. 
 
Under Directive ¶ E3.1.14, the government must present evidence to establish 
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the Applicant is 
responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, 
or mitigate facts admitted by applicant or proven by Department Counsel. . . .” The 
Applicant has the ultimate burden of persuasion as to obtaining a favorable security 
decision.  
 
A person who seeks access to classified information enters into a fiduciary 
relationship with the government predicated upon trust and confidence. This relationship 
transcends normal duty hours and endures throughout off-duty hours. The government 
reposes a high degree of trust and confidence in individuals to whom it grants access to 
classified information. Decisions include, by necessity, consideration of the possible risk 
the Applicant may deliberately or inadvertently fail to protect or safeguard classified 
information. Such decisions entail a certain degree of legally permissible extrapolation 
as to potential, rather than actual, risk of compromise of classified information. 
  
Section 7 of Executive Order 10865 provides that 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.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites 
for access to classified or sensitive information).  
 
Analysis 
 
Guideline F, Financial Considerations 
 
 Revised Adjudicative (AG) ¶ 18 articulates the security concerns relating to 
financial problems: 
 
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 acts to generate 
funds. 
 
Additionally, an individual who is financially irresponsible may also be 
irresponsible, unconcerned, negligent, or careless in properly handling and 
safeguarding 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.  
 
 
 
 
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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 holding 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. 
 
 The SOR lists 27 past due or collection accounts that totaled $63,000. The 
record evidence supports a conclusion Applicant has a history of financial problems. 
Applicant’s history of delinquent debt is documented in his credit reports, his interview 
by an Office of Personnel Management (OPM) investigator, his SOR response, his 
response to interrogatories, and his testimony. Disqualifying Conditions AG ¶ 19(a), 
“inability or unwillingness to satisfy debts” and AG ¶19(c), “a history of not meeting 
financial obligations,” apply.  
 
 Five Financial Considerations Mitigating Conditions under AG ¶¶ 20(a) – (e) are 
potentially applicable: 
 
(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; 
 
(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; 
 
(c) the person has received or is receiving counseling for the problem 
and/or there are clear indications that the problem is being resolved or is 
under control; 
 
(d) the individual initiated a good-faith effort to repay overdue creditors or 
otherwise resolve debts; and 
 
(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. 
 
Approximately half the SOR debt was paid or being paid or is deferred student 
loans. The remaining half was part of the repayment plan. Applicant paid five debts 
($3,415) plus two debts that were duplications ($1,937) for a total of $5,352 and is 
making payment on one additional debt ($5,400). Applicant’s wife’s student loans 
(seven totaling $13,000 plus two duplicates totaling $7,500) which total approximately 
$20,000 of the SOR debts are being deferred. Nine debts that total approximately 
 
 
 
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$27,000 plus two duplications ($7,343) that combined total more than $34,000 of the 
SOR debts are included in a repayment plan.  
 
Following the hearing, Applicant made his first payment to the repayment plan. 
Once sufficient funds are accumulated the finance company will attempt to negotiate 
payments on his delinquent accounts. The future of additional payments to the 
repayment plan is uncertain. The likelihood an individual will continue making payments 
can be judged by that individual’s past conduct. Applicant has made a single payment; 
however, he earlier attempted to address his financial problems through bankruptcy 
which was filed In January 2007. Even though the bankruptcy was dismissed and 
Applicant’s debts were not discharged, Applicant was attempting to address his financial 
problems before the SOR was issued.  
 
Under AG ¶ 20(a), Applicant=s financial problems were contributed to by the large 
increase in his electric bill and his son’s premature birth and associated medical 
problems that resulted in his wife being unable to work for four months. These types of 
debts are unlikely to recur. AG ¶ 20(a) has some applicability. 
 
Under AG & 20(b), Applicant did not experience unemployment, but his wife was 
unable to work for four month following the premature birth of his son. AG & 20(b) 
applies. 
 
Under AG & 20(c) and & 20(d), Applicant has paid seven of the debts and is 
making payment on another debt. This is evidence which shows Aa good-faith effort to 
repay overdue creditors or otherwise resolve debts.@ The student loans are in 
deferment. The remaining nine debts plus two duplicate debts are part of a repayment 
plan. The repayment plan, although belated, is in place and Applicant is paying into that 
plan. With the repayment plan in place, there is an indication that the problem is being 
resolved and is under control. AG & 20(c) and & 20(d) apply. 
 
Whole Person Concept 
 
 Under the whole person concept, the administrative judge must evaluate an 
Applicant’s eligibility for a security clearance by considering the totality of the Applicant’s 
conduct and all relevant circumstances. The administrative judge should consider the 
nine adjudicative process factors listed at AG ¶ 2(a):  
 
(1) the nature, extent, and seriousness of the conduct; (2) the 
circumstances surrounding the conduct, to include knowledgeable 
participation; (3) the frequency and recency of the conduct; (4) the 
individual’s age and maturity at the time of the conduct; (5) the extent to 
which participation is voluntary; (6) the presence or absence of 
rehabilitation and other permanent 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. 
 
 
 
 
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 Under AG ¶ 2(c), the ultimate determination of whether to grant eligibility for a 
security clearance must be an overall commonsense judgment based upon careful 
consideration of the guidelines and the whole person concept.  
 
I considered the potentially disqualifying and mitigating conditions in light of all 
the facts and circumstances surrounding this case. Half of the SOR debt has been paid, 
is being paid, or are deferred student loans and the other half is part of a repayment 
plan. The repayment plan is recent, but Applicant attempted to address his financial 
problems two years ago with his bankruptcy filing. A filing that was unsuccessful. 
Applicant had actively tried to address his past due debts before his recent repayment 
plan.  
 
Overall, the record evidence leaves me without questions or doubts as to 
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I 
conclude Applicant mitigated the security concerns arising from his financial 
considerations.  
 
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: 
 
 Paragraph 1, Financial Considerations:  FOR APPLICANT 
 
  Subparagraph 1.a through 1.aa:  For Applicant 
  
Conclusion 
 
 In light of all of the circumstances presented by the record in this case, it is 
clearly consistent with the national interest to grant Applicant eligibility for a security 
clearance. Eligibility for access to classified information is granted.  
 
 
 
_________________ 
CLAUDE R. HEINY II 
Administrative Judge