DEPARTMENT OF DEFENSE 
  DEFENSE OFFICE OF HEARINGS AND APPEALS 
  
  
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 08-06505 
  ) 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Daniel F. Crowley, Esq. Department Counsel 
For Applicant: Pro Se 
 
 
 
 
______________ 
 
Decision 
______________ 
 
 
HEINY, Claude R., Administrative Judge: 
 
Applicant had a bankruptcy, an unpaid judgment and 11 accounts that were 
charged off or placed for collection, which totaled approximately $16,500. 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 her 
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 
                                                          
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 
Statement of Reasons (SORs) issued after September 1, 2006. 
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Statement of Reasons (SOR) on May 26, 2009, detailing security concerns under 
financial considerations. 
  
 On June 26, 2009, Applicant answered the SOR, and requested a hearing. On 
August 5, 2009, I was assigned the case. On August 17, 2009, DOHA issued a notice of 
hearing scheduling the hearing which was held on September 23, 2009.  
 
 The government offered Exhibits (Ex.) 1 through 4, which were admitted into 
evidence. Applicant testified on her own behalf and submitted Exhibits A through R, 
which were admitted into evidence. The record was held open to allow additional 
information from Applicant. On October 2, 2009, the transcript (Tr.) was received. On 
October 5, 2009, additional material was submitted. Department Counsel had no 
objection to the material, which was admitted into the record as Ex. S through U.  
 
Findings of Fact 
 
 In Applicant’s Answer to the SOR, she admitted the SOR factual allegations, with 
explanations. Applicant’s admissions to the SOR allegations are incorporated herein. 
After a thorough review of the record, pleadings, exhibits, and testimony, I make the 
following findings of fact:  
 
 Applicant is a 34-year-old administrative assistant who has worked for a defense 
contractor since February 2008, and is seeking to obtain a security clearance. Her 
company has twice recognized Applicant’s exceptional performance. (Ex. T) At work, 
she is vice president of the Hispanic employees network. (Ex. U, Tr. 37, 38) 
 
Applicant’s husband incurred medical debts when his jaw was broken. Pursuant 
to a victim’s panel, the other individual was determined to be at fault and was required 
to pay the medical bills, but failed to do so. (Tr. 39) In October 2002, Applicant and her 
husband filed for Chapter 7 bankruptcy protection and the debts were discharged in 
February 2003.  
 
 From July 2003 through February 2004, Applicant was unemployed. While 
unemployed, Applicant incurred three medical debts without medical insurance. Those 
debts were: $382 (SOR ¶ 1.b); $8,704 (SOR ¶ 1.c); and, $407 (SOR ¶ 1.d). Applicant 
had to undergo emergency surgery and remained in the hospital for three days. (Tr. 39) 
 
 In March 2005, Applicant lost all her possessions in a house fire. (Tr. 29) They 
were renters and did not have insurance to cover their loss. (Tr. 43) Following the fire, 
Applicant obtained loans to pay for necessities. All of their income went to rebuilding 
their lives, purchasing clothing, and necessary goods. (Tr. 46) These events resulted in 
financially difficult times for Applicant. Two month’s later, her husband’s grandmother 
suffered a stroke and died, and her bother-in-law was killed in a car accident. From 
September 2005 through May 2007, Applicant was unemployed. 
 
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 Following the fire, the Red Cross paid for three days in a hotel. Thereafter, 
Applicant’s family was on its own. (Tr. 42) In order to pay for their month-to-month 
apartment, Applicant obtained three loans: $512 (SOR ¶ 1.f, initially $693), $654 (SOR 
¶ 1.j, initially $729), and $450 (SOR ¶ 1.l, initially $700) to help them with living 
expenses and to pay for their rent. (Ex. 2, 4) In November 2008, all three creditors 
agreed to accept $25 monthly payments on their debts. (Ex. J, K, L) She was able to 
make a few payments in accord with the agreements until her husband’s unemployment 
prevented further payments. (Tr. 44) Her husband was a car salesman until he became 
unemployed when the economy faltered, and he did not sell as many cars. (Tr. 32) He 
left the state to stay with his mother and remains unemployed. The $512 debt (SOR ¶ 
1.f) was originally $693. (Tr. 45)  
 
 Applicant attempted to continue working following the fire, but with no place to 
live and a young family to take care of, Applicant chose to stay home with her children. 
(Tr. 29, 31) Until February 2008, Applicant was a stay-at-home mother. (Tr. 31) At that 
time, the children were two, four, eight, ten, and eleven.  
 
 Applicant’s husband also obtained other loans; however, because he was the 
only one working, his debts were paid by payroll deduction or by court order. (Tr. 48) 
Twenty per cent of his salary went to pay the loans. This coupled with the house 
payment and utility bills; they were no longer able to pay their car note. (Tr. 49) 
Attempting to the home from foreclosure, Applicant and her husband stopped making 
the car payments. In 2006, Applicant’s 2001 Toyota was repossessed. At the time of 
repossession, Applicant owed $7,500 on the note. The car sold for $4,800. After costs, 
fees, and expenses were added on, Applicant owed $3,500 on the vehicle. (Ex. 3, N, Tr. 
26) 
 
 After the fire, Applicant and her husband decided to stop renting and purchase a 
home. They had difficulty closing on a new home. (Tr. 30) The loan had to be redone 
and Applicant had to pay additional closing costs, which caused additional financial 
difficulties. (Tr. 30) In August 2007 Applicant and her husband owed approximately 
$61,000 on their home when it was sold by sheriff’s sale for $70,000. (Ex. 3)  
 
 In July 2005, Applicant and her husband purchased a 2003 GMC Envoy with 
monthly payments of $533. (Ex. R, Tr. 29) The last payment was made in September 
2007. The vehicle was repossessed and sold leaving a balance owed of $11,731. The 
creditor charged off the debt. Two months prior to or before the hearing, Applicant’s 
husband moved to another state to live with his mother. (Tr. 33) 
 
 A week before the hearing, after Applicant had filed for divorce, her husband 
returned to their home and refused to leave. (Tr. 15) While Applicant and her children 
were out of the house, Applicant’s husband destroyed property and removed property 
from the home. (Tr. 15) Applicant had to obtain a protective order and order for his 
removal from the home. (Ex. A, Tr. 34) Applicant and her four children moved to a hotel. 
Her husband is father to two of the children, ages six and eight. (Tr.34) Two children, 
ages 12 and 14, are Applicant’s from a prior marriage. Applicant’s step-son, age 15, did 
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live with them, but now lives with his mother (Tr. 34) Applicant receives $121 weekly 
child support for these two children. (Tr. 35) Applicant is owed $17,000 in past due child 
support. (Ex. 0, Tr. 35) In May 2009, Applicant sought assistance in receiving her past 
due child support. (Tr. 54) She was told she would be receiving $3,500 in November 
2009. (Tr. 54)  
 
 In the future, her ex-husband’s tax refund will be intercepted to pay past due 
child support. (Tr. 54) When they married, Applicant’s husband also owed $17,000 in 
past due child support. During the course of their marriage, his delinquent support 
obligation was paid by interception of their income tax refunds. (Tr. 36)   
 
 In December 2008, Applicant responded to interrogatories. Her response 
included a Personal Financial Statement (PFS) which listed her monthly income at 
approximately $2,500, her monthly expenses at $2,375, and monthly debt payment of 
$95. (Ex. 3) Applicant’s monthly net remainder (income less expenses and debt 
payment) was $5.88. Applicant’s car, a 1999 Mercury, is now paid for, which saves her 
$200 per month. (Tr. 51) She does not pay child support for her husband’s son and her 
day care expenses have been reduced to $90. In December 2008, these two expenses 
were $350 and are now $90. Her salary has increased $10 per week. She has been 
unable to use this additional income to pay the SOR debts because she had a $500 
electrical bill. (Tr. 52) 
 
 In August 2009, Applicant reduced her monthly contribution to the company’s 
voluntary savings plan from four percent to two percent. (Ex. P) Each month, $25 is sent 
to her credit union account and $50 goes to savings. (Ex. Q) Applicant has had some 
financial counseling. (Tr. 53)  
 
 A summary of Applicant’s judgment, accounts charged off, accounts placed for 
collection and other unpaid obligations and their current status follows: 
 
 Creditor Amount Current Status 
a Chapter 7 bankruptcy. $ Debts were discharged in February 
2003. 
b Medical account placed for 
collection. 
$382 
 
Unpaid. Medical debt incurred while 
Applicant was unemployed. Applicant 
had emergency surgery that required 
a three-day hospital stay. (Tr. 40) 
Debts b, c, and d relate to the same 
medical emergency. 
c Medical account placed for 
collection. 
$8,704 
 
Unpaid. Medical debt incurred while 
Applicant was unemployed.  
d Medical account placed for 
collection. 
$407 Unpaid. Medical debt incurred while 
Applicant was unemployed.  
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e Judgement by veternarian. (Tr. 
41)  
$69 Paid. (Ex. S) 
f Loan account was charged off. $512 Repayment agreement. In November 
2008, the creditor agreed to accept 
monthly payments of $25 on this debt. 
(Ex. 3, J) 
g Telephone account placed for 
collection. 
$283 Unpaid. As of November 2008, the 
debt was $279. (Ex. H) 
h Collection service collecting a 
charged-off credit card account.
$1,441 Unpaid. Payments on the account 
stopped following the house fire. In 
November 2008, the creditor reduced 
the interest rate from 28.24% to 19%. 
(Ex. 3) 
i Loan account was charged off.  This debt is a duplication of the debt 
listed in j. 
j Loan account was charged off. $654 Repayment agreement. In November 
2008, the creditor agreed to accept 
monthly payments of $25 on this debt. 
(Ex. 3, L) 
k Medical account placed for 
collection. 
$50 Applicant had overlooked this debt 
and will pay it.  
l Loan account was charged off. $450 
 
Repayment agreement. In November 
2008, the creditor agreed to accept 
monthly payments of $25 on this debt. 
(Ex. 3, I)  
m Vehicle loan account that has 
been charged off. (Ex. N) 
$3,536 
 
Unpaid. Applicant’s auto loan became 
delinquent when Applicant attempted 
to prevent foreclosure of her home. 
 Total debt listed in SOR $16,488  
 
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 must be considered 
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 overarching 
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adjudicative goal is a fair, impartial, and commonsense 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 
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 to obtain 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 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 Guideline (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 
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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.  
 
A person’s relationship with her 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 her finances so as to meet her financial obligations. 
 
 The record evidence supports a conclusion Applicant has a history of financial 
problems. In 2003, Applicant had to resort to bankruptcy protection. The SOR lists 
approximately $16,500 owed on 12 past due obligations. 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. 
 
7 
Applicant’s delinquent debts are “a continuing course of conduct” under the 
Appeal Board’s jurisprudence because she had 12 delinquent debts totaling 
approximately $16,500. See ISCR Case No. 07-11814 at 3 (App. Bd. Aug. 29, 2008) 
(citing ISCR Case No. 01-03695 (App. Bd. Oct. 16, 2002)). The 12 debts remain unpaid, 
which makes them recent and frequent. However, some of the debts, the loans taken 
out after the fire, were incurred under unusual circumstances. Additionally, Applicant=s 
financial problems were contributed to by her husband’s actions.  
 
The DOHA Appeal Board has previously noted that an applicant is not required 
to be debt-free or to develop a plan for paying off all debts immediately or 
simultaneously. All that is required is that an applicant act responsibly given her 
circumstances and develop a reasonable plan for repayment, accompanied by 
“concomitant conduct,” that is, actions which evidence a serious intent to effectuate the 
plan. See ISCR Case No. 07-06482 at 3 (App. Bd. May 21, 2008).  
 
The Appeal Board’s discussion of AG & 20(b) in ISCR Case No. 08-06567 (App. 
Bd. Oct. 29, 2009) clarifies the applicability of this mitigating condition when an 
Applicant is unable to make substantial progress on delinquent debts after 
circumstances outside an applicant’s control cause delinquent debt. The Appeal Board 
at 3 determined that administrative judge erred when he failed to explain, 
 
. . . what he believes that Applicant could or should have done under the 
circumstances that he has not already done to rectify his poor financial 
condition, or why the approach taken by Applicant was not “responsible” in 
light of his limited circumstances.  
 
What constitutes the responsible behavior depends on the facts of a given case. 
In the circumstances at issue here, Applicant was unemployed from July 2003 through 
February 2004. While unemployed and without medical insurance, Applicant underwent 
emergency surgery and remained in the hospital for three days. Three of the twelve 
SOR debts, which total approximately $9,500, were incurred. In March 2005, Applicant 
and her family lost all of their possessions in a house fire. Applicant and her husband 
obtained loans to rebuild their lives. Following the fire, Applicant was unemployed from 
September 2005 through May 2007. Due to her children’s young age, the traumatic 
nature the fire had on the children, and the cost of day care, it made sense for her to 
remain home with the children. Her husband lost his job and left the state. Applicant 
experienced both separation and has filed for divorce along with the financial burden 
associated with each. These unexpected events were beyond her control. AG & 20(b) 
applies. 
 
Applicant has acted responsibly given her limited resources in that she has 
developed a repayment plan for three of the debts. There is little else Applicant can 
currently do to rectify her poor financial condition. Applicant’s approach is “responsible” 
in light of her limited circumstances. Now that her vehicle has been paid for, she will 
have $200 more per month to address her debts. 
 
8 
The creditors of the three loans have recently agreed to accept monthly 
payments on these obligations. Applicant does not receive full mitigation under AG ¶ 
20(d) because this arrangement was only recently made and there is no “meaningful 
track record” related to these three debts. AG ¶ 20(e) applies to the loan listed in SOR ¶ 
1.i, which is a duplicate of the debt listed in SOR ¶ 1.j. 
 
The Appeal Board has addressed a key element in the whole person analysis in 
financial cases stating: 
 
In evaluating Guideline F cases, the Board has previously noted that the 
concept of “‘meaningful track record’ necessarily includes evidence of 
actual debt reduction through payment of debts.” However, an applicant is 
not required, as a matter of law, to establish that he has paid off each and 
every debt listed in the SOR. All that is required is that an applicant 
demonstrate that he has . . . established a plan to resolve his financial 
problems and taken significant actions to implement that plan.’ The Judge 
can reasonably consider the entirety of an applicant’s financial situation 
and his actions in evaluating the extent to which that applicant’s plan for 
the reduction of his outstanding indebtedness is credible and realistic. See 
Directive ¶ E2.2(a) (‘Available, reliable information about the person, past 
and present, favorable and unfavorable, should be considered in reaching 
a determination.’) There is no requirement that a plan provide for 
payments on all outstanding debts simultaneously. Rather, a reasonable 
plan (and concomitant conduct) may provide for the payment of such 
debts one at a time. Likewise, there is no requirement that the first debts 
actually paid in furtherance of a reasonable debt plan be the ones listed in 
the SOR. 
 
ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations 
omitted).  
 
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 the 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. 
9 
 
 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.  
 
The whole person factors against granting Applicant a clearance are significant; 
however, they do not warrant revocation of her security clearance. Applicant’s failure to 
pay or resolve her just debts in accordance with contacts she signed was not prudent or 
responsible. She has a history of financial problems. However, the debts incurred were 
not the type that indicates poor self-control, lack of judgment, or unwillingness to abide 
by rules and regulations. Money was not spent frivolously. The debts set forth in the 
SOR were not incurred on luxuries, but were for medical treatment, loans taken out 
following the loss of their household goods in a fire, and two vehicles repossessed when 
Applicant was attempting to save her house from foreclosure.  
 
The rationale for granting Applicant’s clearance is more substantial. She was 
forthright and candid in her security clearance application, her responses to DOHA 
interrogatories, her responses to an OPM investigator, her SOR response, and at her 
hearing about her financial problems. Several problems beyond her control adversely 
affected her financial status. Her debts resulted from unemployment, (three debts were 
due to medical problems, and she did not have medical insurance). She has arranged 
to start payment plans on three of the debts. I am confident she will keep her promise to 
pay her delinquent debts.  
 
Applicant is 34 years old. She has demonstrated her self-discipline, responsibility 
and dedication. Her financial problems were caused by the fire, her unemployment, and 
family problems, rather than by her misconduct or irresponsible spending. Applicant is 
an intelligent person, and she understands she needs to maintain her financial 
responsibility.  
 
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—1.n:  For Applicant 
 
10 
11 
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